Why do I Need a Plan for My Investments?

Not many people would start their working day without at least a basic plan of what they are going to do and how they are going to go about it.  Likewise, when going on a holiday we tend to plan where we are going and what we will be doing once we get there.

It interests me then that very few people actually have a plan when it comes to investing.  Sure, I see that people invest in shares, in property, in superannuation and other assets but all too often they do so without planning and without an end goal in mind.

So why is it a good idea to have a plan?


Your plan will stop you from making emotional decisions

All too often we see people purchase an investment property on a whim or panic about a drop in share prices and sell up. These types of emotional decisions can cost you a lot of money. A good financial plan will help you to figure out how much you can afford to invest and your strategy when conditions change. If you follow your plan it will help you invest wisely and avoid emotional decisions.


You are far more likely to reach your goals

A financial plan will help you identify your short, medium and long term goals. This will in turn help you to develop an investment strategy with your end goals in mind. Having that goal to aim toward can help you to stick to your plan and avoid making uninformed decisions.


You can choose the type of investments that suit you

Do know the type of investor you are? Do you know how much risk each type of investment holds? If you know you are a conservative or aggressive investor you can choose the right investments for you. It’s also important to make decisions on your investments with a cool head and buying the right type of investment for you will prevent you from going too far out of your comfort zone.


You won’t be surprised by your tax bill

There are always taxes, regulations, deductions and concessions to keep in mind when you invest. Understanding the tax consequences is important so you don’t get caught out. We have seen clients many clients buy & sell investments without allowing for capital gains or taking tax advice beforehand. It’s always a good idea to speak to your accountant before making any big decisions.


You will use your money more effectively

Those with a plan tend to use their cash flow more effectively. They will “invest first and spend later”. This means your investments will help grow your wealth earlier, more consistently and with a much greater end result.

Whether you pay for a professional to help you put together a plan, or you do it yourself, it’s never too late to start!


The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.