Investment Plan

Investment Plan






Investment Plan

A personal and household investment plan is essential in management of personal finances. An investment plan enables an individual to live within their means, to allocate funds to meet various expenses, to identify financial priorities, to meet financial emergencies, to achieve financial independence and control and to save and invest to attain financial goals. It is important to have an investment plan in order to attain financial security and to review it from time to time. This will enable the individual to make adjustments where necessary, based on their income.

In the development of my personal investment plan, it is important to determine my current financial situation. This is achievable through assessment of my assets including personal property, cash and cash equivalents and invested assets, and in terms of liabilities, which include my current bills and my outstanding debt. Subtraction of my total liabilities from my total assets will give me my net worth. From my household budget, it is evident that I earn a total income of $10,000 with expenses of $8,500 and a balance of $1,500 after deduction of expenses. My debts amount to $950 for every budget period.

In my financial goals, my short-term goals, I would like to pay off my credit card in the next year, in my intermediate goals I would like to pay off my student loan, save and invest for a home and college savings. In my long-term goals, I would like to invest for a comfortable retirement. My strategies to achieve these goals include cutting down on various expenses including clothing, automobile expenses including auto insurance premiums, gas and parking and entertainment and vacation expenses. I will opt to pay in cash more often as compared to using a credit card as paying in cash is much cheaper, and I will avoid credit card debt. I would also like to implement good saving habits along with cutting down on these expenses. Other possible strategies include investing in stock markets, bonds and futures, opening a savings account and starting or buying a business.

The strategies that I choose and think are easy to implement include cutting down on expenses including clothing, entertainment, vacation, automobile insurance, and gas and commuter fees. I will take an additional job about two hours daily in a week and I will look out for discounts on various items and entertainment. I will claim standard deduction on my taxable income to reduce the amounts I pay in terms of taxes. I will change my habits to cook food in the house more often instead of buying food that is more costly. With the money saved through cutting down, I would like to pay off some of my debts and invest the remaining in a savings account and in buying bonds available. Investment bonds may be a risky venture but with thorough evaluation and financial counselling, it may be a good investment.

I chose the above strategies as opposed to other possible alternative strategies including gambling in casinos, investing in the stock markets, starting or buying a new business. This is because I may lose all my savings through gambling. The stock markets are too volatile and are a risky venture that is unpredictable. My money may not be safe in the stock markets and money may be lost. Starting or buying a new business is not one of my options since I may not have enough money to start or buy the business, and my bank statements may not be good enough to enable me secure a loan for the same. I may not have adequate time to start up and run the business due to my current job and my plan to take up an additional job.

I will invest about $1500 each month from cutting down on the expenses listed above. I would like to invest $1000 in my savings account and $500 in buying bonds. My estimated return of investment in bonds is about $360 per year at the rate of 6% per year. My estimated return on investment in my savings account is about $480 by year at a rate of 4% per year and therefore these amounts to a total of $840 per year. Increasing the amount invested each month will enable me achieve my financial goals.


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Missouri State University. (2015). Creating a Personal Financial Plan. Retrieved from