How to Create an Investment Plan That's Right for You in 2026

An investment plan outlines how and why you invest your money, serving as a roadmap to help you reach your financial goals while balancing your risk tolerance and time horizon.

Ideally, your investment plan is as personal as it is financial. Your investment plan will likely reflect various life goals and priorities, and your investment plan should evolve as circumstances change.

An investment plan isn’t set in stone, nor is it a guarantee of future outcomes. An investment plan that is right for you and your circumstances requires regular reviews (e.g., annually) and adjustments.

What Is an Investment Plan?

An investment plan is what it sounds like: A plan that will dictate how and why, and to some degree where you invest your money. Whether you’re investing online or through other means, this roadmap can help you create a strategy for your portfolio, helping you make investment choices that will guide you toward the financial goals you’ve staked out, while also balancing risk and potential reward.

No investment plan is foolproof, and a plan can and often should evolve over time, as your life and priorities shift. The point is to start this process sooner rather than later, get a sense of direction, and then put your investments to work — whether you’re buying stocks or other assets — to help you reach your preferred outcomes.

An Investment Plan Is Flexible

Again, it’s important to remember that plans change, markets change, and your goals may change over time as well. In addition, your tolerance for risk can shift, which will have an impact on other aspects of your investment plan.

In short, plans are not necessarily static, but they should serve as guideposts as you navigate the markets.

There are several things to consider before enacting your plan, too, and it starts by thinking about your investing goals, your risk tolerance, and your timeline — followed by some more specific choices about investments.

7 Steps to Build Your Financial Investment Plan

As a way to kickstart the creation of your investment plan, here are seven steps.

1. Define Your Financial Goals

Before anything else, investors can start by giving serious thought to their financial goals. Rather than thinking in terms of dollar amounts at first, it can be helpful to think of life priorities, e.g.:

•   Buying a home

•   Starting a business

•   Getting a graduate degree

•   Having a child

•   Paying off debt

•   Saving for a secure retirement (e.g., opening an IRA or 401(k) plan)

Goals can be long or short term. For example, buying a car or taking a trip for a birthday or anniversary might be a short-term goal. Buying a home and saving for retirement are examples of longer-term goals.

After you write down different goals, it may help to break them into specific steps: e.g., opening an account, putting aside $X per month for a certain goal, aiming to reach $Y total amount in a certain period of time (e.g., five years).

Goals will vary from person to person, so think about your circumstances, as well as what’s realistic and achievable for you.

2. Assess Your Risk Tolerance

With some broad goals in mind, you’ll want to assess your risk tolerance. Risk tolerance refers to how much risk of loss that you, as an investor, can stomach. As the old saying goes, the bigger the risk, the bigger the potential reward — but the reverse is also true: the bigger the potential reward, the higher the risk of losing money. Some investors simply can’t handle wild swings in the market (a.k.a. volatility).

The important thing to remember is that each and every investment involves assuming some level of risk. The question is: How much risk are you willing to take on? You may need to experiment a bit to get a true idea of your risk tolerance, but it’s critical to figure it out, and bake it into your investment plan.

3. Determine Your Investment Timeline

With a framework based around your financial goals and risk tolerance, the next step to creating an investment plan is to map out a specified timeline. If your goal is to buy a house, when do you want to do it? Within five years? Ten years? How you invest in order to achieve those goals within a given timeframe will shape your investment strategy.

With that in mind, think about your overall timeline for investing. This will also depend on your age: older investors will likely have shorter timelines with which to reach their financial goals than younger investors, and vice versa. So, think about your goals, and how prospective timelines match up. This will play a role in how much you can save, and how you actually invest your money.

Recommended: 5 Investment Strategies for Beginners

4. Choose Investment Accounts

With the cornerstones of an investment plan sketched out, the next step is to start putting it all into action. That means actually building a portfolio, and investors can use any number of investment accounts to do it — often simultaneously.

Investors can fund their retirement accounts, like 401(k)s available through an employer, or an IRA. They can open investment accounts for children, such as 529 plans.

Experienced investors can open a self-directed brokerage account, allowing them to buy and sell stocks or securities as they wish. Qualified investors can use margin accounts, which allow them to buy investments using borrowed funds (although this is a higher-risk strategy).

Retirement accounts tend to be focused on long-term goals, and typically offer tax advantages, according to the rules set by the IRS. Brokerage accounts can be used for long- or short-term investments, but these are typically taxable. It’s possible to combine different types of accounts, and many investors do. However, the tax implications can be complex. A tax and financial professional can offer advice on what strategies and options may be best for individual circumstances.

Another consideration is whether to choose an automated investing service. Sometimes called robo advisors, these accounts don’t use robots, but rely on sophisticated algorithms to suggest pre-set portfolio options based on your personal inputs on a questionnaire.

Robo portfolios can be low cost and help investors make investment decisions when they need guidance. Robo platforms are simply a type of investment options; they do not guarantee certain outcomes.

5. Set Up Dollar-Cost Averaging (DCA)

Behavioral finance research suggests investors often let emotions drive decisions, buying more in response to hype or headlines, and investing less when prices drop (usually out of fear of getting caught in a downturn). Dollar-cost averaging is a strategy where you invest the same amount on a regular basis (e.g., $300 every other week).

With this strategy you don’t make choices in response to market fluctuations, but keep investing steadily.

In other words, DCA helps to control impulse moves by keeping investments automatic and consistent, and thus avoid the temptation to time the market (e.g., buying and selling in an attempt to ride the highs and avoid the lows).

Also, because dollar-cost averaging means that you invest the same dollar amount each time, you tend to automatically buy more shares when prices are lower and fewer shares when prices are higher. Over time, this strategy may help offset some market risk, as well as help manage investor risk, and it may lower your overall investment costs.

6. Diversify Your Asset Allocation

As you start to invest, you’ll need to develop a strategy that may help you make progress toward your financial goals. A part of that strategy will likely involve diversification, which means that you’re investing in different types of investments in an effort to reduce the risk in your portfolio.

There are different ways to do this, but the basic idea is to mix up your investments, or asset allocation, to the point where if some stocks fall in value, your portfolio won’t lose substantially, as there will be other investments to provide ballast.

This is not an exact science. Your strategy will be tied to your goals, risk tolerance, and timeline. Diversifying your portfolio can be beneficial in that it’s one way to help mitigate the risk of loss. However, diversification can’t fully protect a portfolio from losses in a down market, nor can it guarantee results.

Recommended: Stock Market Basics

7. Monitor and Adjust Your Portfolio

At this point, your investment plan is in action. Hopefully, you’re making progress toward your financial goals, too. Now, it’s all about monitoring and adjusting your portfolio to account for changes in the market, the economy, or maybe, your personal goals and preferences.

As you get older, your timeline for different goals is likely to change. Your risk tolerance might also change. You may want to get more aggressive during a bull market, or more defensive — depending on your mindset. Either way, you’ll want to keep an eye on what’s changing, and make changes to your portfolio accordingly.

Investment Plan Example: Putting It Together

Here’s a look at how an investment plan might work.

Assume an investor is 25 years old, and their primary goal is to retire when they’re 65 years old with $3 million. They have a moderate risk tolerance. That gives them a long timeline, plenty of options that align with their risk tolerance, and a lofty goal. But, again, time may be on their side.

The investor plans to invest in both an individual retirement account (IRA), and a 401(k), which is offered by their employer. They also open a self-directed brokerage account so they can invest in stocks and other securities using an online platform. So, they’re investing with three different accounts. They plan to invest 10% of every paycheck they earn for retirement, plus 5% in the brokerage account.

One strategy the investor can use is to simply invest in index funds that track the S&P 500, or ETFs and mutual funds that likewise track the market. This is a relatively low-risk strategy, but the investor is worried about missing out on potential gains in individual stocks and sectors. So, they decide to dedicate 5% of their portfolio to individual stock trading. That’s a fairly small portion of their portfolio; it’s still diversified to a large degree.

They could also choose a balanced approach, investing in index funds and ETFs, along with bonds, bond funds, and maybe some alternative investments like precious metals. Again: there’s no wrong way to go about it, it’s all a matter of determining what works for you. If necessary, it may also be worth speaking with a financial professional for guidance.

Common Investment Planning Mistakes to Avoid

There are many mistakes that investors can make. Luckily, most of these potential missteps are easy to avoid. Here are some of the more common ones:

•   Taking on too much risk: Some investors may be engaging in riskier investments than they anticipated. This could be remedied by doing more research on specific investments to limit risk exposure, and regularly rebalancing and reallocating.

•   Lacking goals: This goes back to the beginning: investing without a goal is like driving a car without a destination in mind. To end up where you intend, it helps to have a plan.

•   Failing to diversify: A portfolio may not be as diversified as an investor believes, and that could introduce more risk than anticipated. Understand your asset allocation, and adjust with diversification in mind.

•   Taxes: Investing can and does incur tax liabilities, but the tax implications vary according to the account and sometimes the type of investment. For example, most retirement accounts offer certain tax breaks. Make sure you understand the tax implications of different investments as well as the accounts they’re in. Seek professional help as needed.

•   Emotional investing: If you find yourself panic-selling or buying investments based on hype, you may need to take a step back and rework your strategy. Emotional investing can lead to poor choices and the risk of loss.

The Takeaway

Creating an investment plan involves some legwork in determining your goals, figuring out your risk tolerance, and more. If you want to achieve certain financial goals, a plan can help you get there. It’s important to remember, though, that nothing’s guaranteed, and investing involves risk.

Investors can use different types of accounts to invest, and a myriad of different types of investments to try and achieve their goals. Caution is warranted, always, of course, and it may be a good idea to consider speaking with a financial professional before investing.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest®. You can trade stocks, ETFs, or options through self-directed investing with SoFi Securities, or simply automate your investments with a robo advisor from SoFi Wealth. You'll gain access to alternative investments and upcoming IPOs, and can plan for retirement with a tax-advantaged IRA. With SoFi, you can manage all your investments, all in one place.

Take a step toward reaching your financial goals with SoFi Invest.

FAQ

What is the first step in investment planning?

One first step in investment planning is to determine specific financial goals. Knowing your priorities can help you figure out a strategy that aligns with your goals, and build a plan and portfolio that can help you achieve those goals.

How much money do I need to start an investment plan?

There’s no minimum amount of money to start an investment plan; in fact, you could start planning things out before actually investing any money. That said, some types of investment accounts have minimum deposit requirements, so be sure to inquire.

What is the best investment plan for a beginner?

There’s no “best” investment plan for beginners. But it may be relatively straightforward to start with a retirement account, such as an IRA or 401(k). In terms of strategy, investing in index funds or mutual funds may prove a low-cost way to get started.

Can I change my investment plan over time?

Yes, investors can and likely will change their investment plans over time. Things change, and life is messy. Investors can change or amend their plans accordingly.

Should I hire a professional for financial investment planning?

You can consider hiring a professional for financial investment planning, and whether you do so will likely be determined by your budget, how complicated your plan and other strategies are, and more.

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