Tip # 1 - Define yourself
A personal investment plan needs to clearly explain to your broker and other investors who you are. You need to describe what your risk tolerance is and what your personal constraints are. As you define your financial self, it will be easier for life insurance companies to determine how much coverage you need due to your lifestyle and investment choices. You will also be able to provide information about your asset allocation and targets and how your personal investment strategy directly impacts it.

Tip # 2 - List the "Do's" and the "Don'ts"
Your personal investment plan needs to explain what type of investments you are willing to try and which ones you will not try. This won't leave any room for questioning from the broker that may be trying to get you to invest more money in high-risk strategies. If you do not like to invest in high-risk stocks, you need to explain this in your investment plan. Explain why you want to invest in low-risk things like bonds and precious metals. Listing the "do's" and the "don'ts" will help you achieve your goals and invest your money wisely.

Tip # 3 - A future plan
One reason why you need to create an investment plan is so that you can proceed with caution as you move forward with your investments. The investment plan should help you avoid investment mistakes that could cost you a fortune. You need to list what you plan to do when the market tanks and how to predict when the market will move from a bear market to a bull market. Creating a plan will help you stay on-track for your retirement without the need to worry about playing around with your investments on a daily basis.

Once you have all the information you need about yourself and your goals, you can make your own personal investment plan. There are 4 things that go into a personal investment plan:

1. Risk and return objectives


2. Investment guidelines and constraints


3. Investment policy


4. Portfolio monitoring, reevaluation, and rebalancing

After you have written your investment plan, refer to it often. Make sure you are using it to help yourself stay on-track with your investment decisions. If you start to deviate from your plan, you could end up in serious trouble with your investment strategy. This is because you are moving outside your "comfort zone" and it can be hard to re-gain the money you lose in some high-risk investment strategies that weren't too successful.

To make sure you are following your investment plan, compare the performance of your investments to your plan at the end of each quarter. Install a stock ticker on your computer and customize it so you can watch your stock investments to see how they are doing. This can also help you decide when you should sell them as they are on the incline.

Finally, always trust your investment plans and don't be swayed by what everyone else is doing. Just because MSNBC is claiming they know what the best stocks are right now doesn't mean they are correct. Follow the investment plan you have created and stick to it no matter what.