What Is Investment Planning? Canadian’s Guide

Learn about investment planning
What is Investment planning
Article Overview

You want to be as prepared as possible for your future. That’s where investment planning comes in. Investment planning is figuring out how best to use your money to have a comfortable retirement and meet other financial goals.

Creating a plan for this can seem like a daunting task, but don’t worry. This blog post will allay your doubts and fears by answering some of the most common questions about investment planning. By the end of this blog, you’ll be ready to start creating an investment plan of your own! So, if you’re ready to make the most of your money, let’s dive in.

What is investment planning?

Investment planning is creating a strategy for using your money so that you can reach your financial goals. This usually involves looking at things like what you want to achieve, how much risk you’re willing to take on, and what kind of time frame you’re working with.

In short, investment planning is aligning our financial goals with the financial resources available to us. Thankfully, today there are many ways to invest, from stocks and bonds to real estate and others. So, no matter your current funds and goals, there’s an investment option that can help you reach them.

Why is investment planning important?

Investment planning is important because it gives you a roadmap for the best use of your money. It’s easy sometimes to make impulsive decisions or let your money sit idly instead of working for you. Having a plan helps keep you focused and on track to make the most of your money.

Another reason investment planning is important is that it can help you reach your financial goals. By determining what you want to achieve and how best to use your money, you’re more likely to reach your goals than if you were to wing it.

Benefits of investment planning

There are many benefits to investment planning, including:

1. Financial understanding

Improved financial understanding is one of the key benefits of investment planning. When you take the time to create an investment plan, you learn about things like risk tolerance and portfolio diversification to support you in making better financial decisions in the future.

2. Standard of living

Financial savings can be there to support you in difficult times, providing you peace of mind should you ever need it. For instance, if a primary working member of your family ever passes away or is unable to work.

3. Efficiently manage income

Investment planning can help you figure out how much money you need to save and how best to use your money to reach your financial goals, manage expenditures, make tax payments, and so on.

4. Savings

Investment planning can also help you boost your savings. When you have a plan, you’re more likely to be disciplined about saving and investing. This can help you reach your financial goals sooner and can help you build a nest egg that you can use in the future. Plus, when you utilize highly liquid investment vehicles, you’ll have funds that can easily be taken out in the event of an emergency.

5. Family security

Investment planning is important for family security. Should anything happen to the primary working member of the family, the other members can remain financially secure thanks to the investment.

How to plan for your investment planning future

When it comes to planning for your financial future, it’s important to create a portfolio tailored to your present and future needs. A portfolio will help you avoid taking on more risks than you’re comfortable with and help protect your money in the long run. One great way to plan for your future is to consult with a financial advisor. They can help you understand the different types of investments and what might be best for you. They can also guide you through rebalancing your portfolio as your goals and needs change over time.

What are 4 types of investments?

When it comes to investment planning, it’s important to choose the right mix of investments for your goals, as each type of investment has its own set of risks and rewards.

There are four main types of investments: stocks, investment funds, bonds, and annuities:

1. Stocks

When you buy a stock, you buy a piece of ownership in a company and become a shareholder. As a shareholder, you have the potential to earn money through dividends and capital gains. While the value of whatever shares you own tend to appreciate, they can also depreciate, leaving some room for risk.

2. Investment funds

Investment funds are another type of investment that allows you to pool your money with other investors to buy a basket of assets.  These can include stocks, bonds, and other securities.

Investment funds offer diversification and professional management, but they also come with commission fees as a fund manager designates them. The benefits of investment funds include diversification, professional management, and liquidity.

3. Bonds

Bonds are a type of debt investment. When you buy a bond, you lend money to an entity like a government or corporation. The entity agrees to pay you interest and repay your principal later in exchange for your loan. Bonds aren’t ideal for quick returns on investments or early retirement. However, the benefits of bonds include long-term stability and income.

4. Annuities

Annuities are contracts that are purchased from insurance companies. The benefits of annuities include guaranteed periodic payments after retirement and tax advantages.

‍ What are the steps of investment planning?

Now that we’ve talked about what investment planning is and why it’s important, let’s talk about how you can plan for your future.

This process is about much more than choosing the right stocks or bonds to buy. Without the proper steps and careful consideration, it’d be hard to call it a plan in the first place. And it would prove even harder to invest your money at the lowest possible risk effectively.

By following these steps, you can create an investment plan that accounts for everything that matters – including your current financial situation, goals, timeline, and how much risk you’re willing to take on.

1. Assess Your Current Financial Situation

First, have a clear picture of your current financial situation. This includes understanding your income, debts, expenses, and long-term financial goals.

You’ll also need to know your net worth, which is the value of your assets minus your liabilities. To calculate this, add up the total value of all your savings and investments, then subtract any debts you may have. This is a good starting point for understanding your priorities and what you have to work with.

2. Determine Your Financial and Investment Goals

The next step is to determine what you want to achieve with your investments. Do you want to grow your wealth? Generate income? Save for retirement?

Your goals will shape what types of investments you make and how much risk you’re willing to take. For example, if you’re saving for retirement, you’ll likely want to focus on growth investments like bonds. But if you need the income now, stocks may be a better choice.

3. Determine Your Timeline and Risk Tolerance

Now, you can begin thinking about how much of a risk you’re willing to take.

This is where your time horizon comes into play. If you’re investing for the long haul, you can afford to take on more risk, having more time to ride out the market’s ups and downs. But if you need your money sooner, you’ll want to be more conservative with your investments.

To get an idea of your risk tolerance, ask yourself how you would feel if your investment account lost 20% of its value in a year. If the thought of that makes you anxious, you have a low-risk tolerance.

On the other hand, if you’re comfortable with taking on more risk for the potential of higher returns, you have a high-risk tolerance.

Remember that everyone’s risk tolerance is different, and there’s no right or wrong answer. The important thing is to be honest about what you’re comfortable with.

4. Decide What to Invest In

Now that you know your financial situation, goals, and risk tolerance, it’s time to start thinking about what to invest in.

There are several types of investments, but some of the most common are bonds, stocks, mutual funds, and exchange-traded funds (ETFs).

Each investment type has its pros and cons, so it’s important to research and find the option that best suits your needs.

5. Monitor and Rebalance Your Investments

Finally, don’t forget to monitor your investments and make sure they’re still in line with your goals.

As your needs change over time, you may need to rebalance your portfolio to ensure you’re still on track. For example, if you’re getting closer to retirement, you may want to start shifting some of your investments into less risky options.

Creating a diversified portfolio is one of the most important steps in investment planning. Diversification is all about spreading your money around to different investments to minimize risk.

A diversified portfolio will typically include a mix of stocks, bonds, and cash equivalents. But the specific investments you choose will depend on your goals, risk tolerance, and time horizon.


The meaning of investment planning is the process of coming up with a plan to reach your financial goals by putting your money into different investments like stocks, bonds, and real estate.

The steps in investing planning are setting financial goals, figuring out how much risk you are willing to take, choosing good investments, spreading out your portfolio, and regularly checking on the plan and making changes as needed.

The main goal of investment planning is to help people and businesses reach their financial goals by making smart investment decisions that balance risk and return and take into account their personal circumstances and the amount of time they have to invest.

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Written by:

Jim Pan, CFP, MFA-P

Jim is a dedicated, fee and advice only independent Certified Financial Planner with a focus on supporting healthcare business owners during their crucial growth phase. His expertise lies in offering comprehensive solutions to minimize taxes while embracing a holistic approach. With a career spanning back to 2010, Jim has established a strong presence in the financial industry. He proudly holds a range of designations, including Certified Financial Planner (CFP), and Master Financial Advisor - Philanthropy (MFA-P). He is currently pursuing additional designations and qualifications to better serve his clients and community. Beyond his qualifications, Jim is a member and an esteemed participant in the Million Dollar Round Table (MDRT), an exclusive global association comprising the top 1% of financial advisors. Jim's commitment extends to the community, where he spearheads numerous charitable fundraising events and plays an active role in enhancing the well-being of others. Additionally, he has contributed significantly by serving on the board of the Canadian Mental Health Association in Vancouver. Currently, he volunteers with Junior Achievement of British Columbia (JABC) to present personal finance topics to youths.

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