What You Need to Know About Investment Plans

By Gabriel Lewit

Whether you’re in the early innings of adulthood or retirement is on the horizon, whether you’re a resident of Buffalo Grove, IL or Beverly Hills, CA, planning is the most crucial step to achieve your financial goals. Without a sound investment plan, you may miss opportunities to grow your nest egg, save on taxes and fees, and/or avoid costly mistakes.

Investment planning is essential in both calm and tumultuous times. It can help you stay the course when panic sets in and signal an exit when the markets get too hot. Yet far too many Americans don’t have an investment plan or fail to follow the one they’ve created. 

What they do have a lot of is investment regrets. According to a survey of investors conducted by NerdWallet, seven out of ten investors said they wished they had invested differently. 

To avoid your own set of investment regrets, read on to learn more about investment plans and discover why you absolutely need one. 

SGL Financial’s retirement planning services can set you on the path to a hassle free retirement. Get started today.

Chapter 1

What is an investment plan?

Included in an overall financial strategy, the investment plan lays out how your money is invested to achieve your financial goals. Without a plan, you’re more apt to purchase a random basket of mutual funds that may or may not yield the necessary returns. 

Investment plans cover both your short-term and long-term investment goals, considering your time horizon and risk tolerance. A short-term goal may be saving for the down payment for a home. A long-term goal could be paying for your kid’s college education. An investment plan lays out the stocks, bonds, and alternative investment strategies that will be employed to reach your goals.

Modern technology makes it possible for people to pursue DIY investment planning or rely on algorithms and machine learning to choose their investments for them. But for a more comprehensive plan, sound advice, up-to-date market information, and confidence in your strategy, it’s often a good idea to hire a financial advisor.

Either way, when crafting an investment plan make sure it includes the following: 

·      Your short and long term goals 

·      Time frame to achieve those goals 

·      Investment amount now and in the future 

·      Any concerns about current assets and/or tax exposures 

·      Risk tolerance

·      Your investment approach

·      How often you’ll want to adjust your investment plan

Chapter 2

Why is it important to have an investment plan?

Choosing the right investments now and in the future is key to building wealth. If you make too many investment mistakes it can steer you off course, while not investing at all can mean falling behind. Either way can mean years of playing catch up. 

There are many benefits to growing and managing your wealth through an investment plan. Here are just a few:

Investment plans help you set and stick to goals. 

When you create an investment plan, you first must figure out your short- and long-term goals. Whether it’s starting a family, opening a business, putting your children through college, or retiring at 55, investment planning forces you to think about what you want out of life and map out how you’ll obtain it. 

Earn better returns with an investment plan.

Investment choices abound. But stocks and bonds aren’t created equal. Some generate better returns than others. Randomly picking investments with no clear plan or exit strategy can quickly turn into a money-losing endeavor. Whereas creating a well thought out investment plan that considers your risk tolerance and time horizon is often a money-making endeavor. 

By planning how you want to invest your money, making sure your risk is spread out across different asset classes, you’ll have a better shot of generating long-term returns than if you buy and sell stocks with no rhyme or reason.

Mitigate your tax exposure.

Almost all investments are subject to taxes in one way or another. However, how those taxes are applied varies greatly from investment to investment. For example, capital gains taxes vary based on how long the investor has held the investment. Also, some dividends are qualified while others are not. 

Not taking into account how your investments will be taxed and whether there are tax avoidance/tax minimizing strategies you can apply can eat away at your returns. Part of crafting a comprehensive investment plan is choosing strategies that will reduce your tax exposure. That may be employing tax-loss harvesting or choosing passive investments with low turnover. 

Keep your emotions in check.

Investing is emotional. After all, your money is on the line. But acting on emotion in tumultuous times can be devastating to your investment portfolio. It’s the reason so many investors buy high and sell low. They see the markets tanking and they cash out. They end up returning to the market later, forced to repurchase stocks at a higher rate. 

But if you have a long-term investment plan, you’re less likely to react to the daily moves in the stock market. You can rest assured that your investment plan was built to withstand gyrations in the stock market and over the long haul will meet your goals, barring a seismic shock to the economy. 

Chapter 3

How does your investment plan fit into your financial plan?

Financial planning provides the overall framework to reach your short- and long-term goals. From identifying those goals to budgeting and managing cash flow, financing a college education, planning for retirement, developing tax strategies, and more, financial planning helps people lead their best financial lives and, ultimately, achieve financial independence.

A financial plan aims to lay out all your goals and devise a plan to achieve them, considering all aspects of a person’s financial life. 

Investment planning is a critical part of most people’s financial plan. A quality investment plan is often integral to the execution of a financial plan, as investments can provide the means to achieve financial goals. 

However, your financial plan also needs to inform your investment plan. Which stocks will you invest in? How much exposure to alternative asset classes do you need? How much risk should you take? The answers to these questions should be determined based on the road map your financial plan provides.

Furthermore, your financial plan tells you when it’s time to change your answers to those questions. After all, your investment portfolio should look very different when you’re 30 years old compared to when you’re 60 years old. A financial plan can be an effective way to keep investing on track, revealing if your investments are too aggressive or conservative, and when it’s time to shift course.

Chapter 4

Financial professionals and your investment plan

The internet makes it seem like you can create an investment plan in a few clicks and be on your way to great returns in no time. The reality is that to succeed you need to create a comprehensive financial and investment plan that considers your situation now and in the future. You can’t get that with a robo advisor, but you can with an investment professional, along with comprehensive plans that mitigate taxes and maximize returns. 

When considering working with an investment professional, look for someone who offers a holistic approach to financial planning. You’ll want your investment advisor not only to know the ins and outs of investing, asset classes, and allocation, but also to have deep knowledge of wealth management, taxes, insurance, inheritance, and retirement planning. They need to understand how your investment plan fits into your broader financial strategy.

Not all investment professionals are created equal. Before choosing one to work with, you must understand the difference between brokers, investment advisors, and financial planners. 


Broker-dealer is an individual or company that buys and sells securities for its own account or for customers. Brokers are limited in what securities they can sell based on the licenses they have. A broker with a Series 6 license is permitted to sell mutual funds only, while someone with a Series 7 license has more leeway to sell different types of securities. 

Brokers are either full service, which means they provide an array of investment services, or discount, which means they provide research and the ability to execute trades. 

Keep in mind brokers may have the firm’s interest in mind when it comes to selling securities. They are bound by the suitability standard, which means the transaction must be suitable to meet the client’s needs but is not necessarily the best option. 

Investment advisors

Investment advisors are individuals who provide clients with investment advice, choosing stocks, bonds, and mutual funds that match an investor’s goal. They are registered with either the Securities and Exchange Commission or with their state regulator and have discretion to make investment decisions for you without needing your approval before a transaction. Some investment advisors look at your finances to craft a holistic plan while others focus narrowly on stocks and bonds. 

Financial planners/financial advisors

Financial planners or financial advisors craft financial plans for their clients considering all aspects from savings to loans. They look at budgeting, investing, insurance, inheritance, estate planning, and other aspects of your financial life. 

Financial planners may be brokers or wealth advisors. What’s important for investors is to choose a financial planner that is a fiduciary. That means he or she must act in your best interest. 

Also, make sure you understand how the financial advisor is paid. Do they earn commissions or charge fees? Do they earn a combination of commissions and fees? 

If the financial advisor refuses to be transparent about how they earn money, then alarm bells should sound in your head. Chances are, they are profiting off you without providing value to you.

Chapter 5

What is an Investment Advisor Public Disclosure?

Before you choose an investment professional to work with you must do your due diligence. You want someone who is ethical and has his or her client’s best interest at heart. To ensure the financial planner you’re turning your money over to is above reproach it’s important to check out the Investment Adviser Public Disclosure (IAPD) database.

The IAPD is a searchable database that discloses information about registered investment representatives. The database is designed to help investors determine if they should do business with a specific investment professional. 

General Information

Reports include a brief overview of the investment professional’s credentials, license, registrations, and state exams passed. The report also includes an employment section listing employment history for the past decade and a list of investment firms he or she was registered with. 

The disclosure section is the final piece of the IAPD and is arguably the most important. It details any issues the investment professional had with customers or regulations. It also lists any disciplinary actions faced but the investment professional. 

Form ADV

The IAPD should also link to the adviser’s (or their firms’s) Form ADV. This is a form that investment advisors must file to register with the SEC. On this form you can find information about:

  • Compensation – Advisors must indicate in section 5E how they are compensated. Confirm whether they charge AUM fees, hourly fees, subscription fees, fixed fees, commissions, or performance-based fees.
  • Accounts managed – In sections 5C and 5D, you can learn how many clients the firm advises. Take into account the size of the firm as you read this number. You want a ratio of team members to clients that demonstrates a healthy business, but that doesn’t suggest that your portfolio might be lost in the shuffle.
  • Assets managed – Take a look at sections 5D and 5F for information about the value of assets under management. You want an advisor who knows how to handle portfolios like yours.
Chapter 6


Investment planning is an important part of reaching your financial goals. Without an investment plan it’s hard to make your dreams a reality. The good news financial advisors are there to help.  They can craft an investment plan, considering your unique situation, goals, and financial landscape.

SGL Financial includes investment planning as part of its comprehensive service offerings. The firm relies on evidence-based, modern theory-driven portfolio management with a sophisticated overlay system that works to ensure that clients’ assets remain balanced and at maximum efficiency. SGL believes in keeping costs low, taxes low, and returns high.

The SGL Financial investment philosophy hinges on the fact that you can’t time the market. It’s an unpredictable entity. Consequently, a successful investment plan requires a disciplined, long-term approach.

SGL prides itself on transparency, offering fee-based services that put clients first. Moreover, the firm provides holistic services, making it a one-stop-shop for planning, investing, retirement, insurance, Medicare, taxes, and legal.

Reach out today for more information.


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