Investment plan – an investor’s most important tool | Nordea

Spotted: an investor without a plan | Femme x Nordea Investor Collective 05

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Investing without a plan is like going to the grocery store hungry without a shopping list or driving to Italy without any map or navigator. A good investment plan, on the other hand, guides you where you're going, at what pace, which route to take, and what to avoid along the way. A good investment plan also evolves with you like a good friendship. In this collaboration episode between Femme and Nordea, Tiina Raininko and Jenni Muurinen from Nordea, along with Isa Hudd from Inderes, go through tips for building your own investment plan. The podcast episode is in Finnish.

Why do you need an investment plan?

An investment plan might sound dull, but it’s actually your best friend as an investor. You’ve learned the basics – now it’s time to pull everything together. An investment plan turns what you’ve learned into action.

Without one, it’s easy to make decisions based purely on emotion. When markets swing, you might panic sell or buy everything in sight during a rally. A good plan guides you and keeps you on track.

What does having an investment plan mean in practice?

Your investment plan doesn’t need to be a complex document. It’s a practical tool that helps you make sensible decisions. It can be as simple as a few notes on paper, a spreadsheet or even a few clear principles in your head, answering:

why you’re investing and what your goals are
how much you can invest each month
how much risk you’re willing to take
how you’ll diversify your investments.

The key thing is to have a plan and stick to it.

Psst, täältä löydät lisää luentoja!

Interested in any of these?

Have you started without a plan?

If you’ve already started to invest without a plan, don’t worry. It’s never too late to create one. Start by reviewing your current investments and consider whether they match your goals and risk tolerance.

You can build your plan around what you already have. What matters most is that future decisions are based on your plan – not emotions or other people’s opinions.

How to create your plan – 7 steps

Don’t worry, it’s not complicated. We’ll go through it step by step – like assembling furniture with instructions.

1. Review your starting point

2. Define your goals

3. Assess your risk tolerance

4. Choose your investment profile

5. Plan your diversification

6. Decide how you’ll invest

7. Set up a system for tracking your investments

Start by reviewing your current financial situation

Review and consider at least the following:

How much do you have left to spend monthly after all expenses?
Do you have an emergency fund, meaning money equivalent to a couple of months' net income for unexpected situations? As we learned earlier, an emergency fund gives your finances flexibility and helps you prepare.
What kinds of loans do you have and how much payment time is left on them. For example, a mortgage is more cost-effective when compared to consumer or credit card loans.
What is your life situation? A young single person or a family has different starting points and needs.

Set a clear goal and time horizon

You might say that your goal is to become rich, but think more concretely about what you want to achieve. For example, “I want to have 50,000 euros saved for buying a home in 7 years” or “I want to build my pension savings by 2,000 euros each year”. You can have multiple goals across different timeframes.

Time shapes your investment choices

Short term (1 to 5 years): Like planning a weekend trip – you’ll likely want to keep risk low. This often means less exposure to equities and more to savings accounts or lower-risk fixed-income funds.
Medium term (5 to 10 years): Like planning to buy a boat or a holiday home.
Long term (10+ years): Like planning for retirement. You can usually afford to lean more heavily into equities, as time helps smooth out market ups and downs.

Read more about diversification and risks

It’s okay to be both bold and cautious

Like we said in the first lesson, there’s no single “right” level of risk in investing – only what’s right for you. So think carefully about what you’re comfortable with. Try a simple stress test: how would you react if your investments fell by 20%? Would you sleep soundly or feel compelled to sell some or all of them?

What matters most is that the level of risk in your portfolio suits your financial situation and your ability to tolerate risk. When your investments are sized and balanced correctly, you can sleep soundly at night – regardless of whether your portfolio is “mild” or “spicy”.

Read more about diversification and risks

Your investment profile reflects you as an investor

It’s fine to change your mind along the way. You may discover you’re less focused on returns than you thought. Generally, the more volatility you can handle, the higher returns you may achieve over the long term. Your profile might be:

Conservative: You like documentaries. You know what you get and sleep soundly.
Moderate: You like independent films. You’re open to some excitement, but nothing too wild.
Balanced: You love action comedies. You want both excitement and predictability.
Focus growth: You prefer thrillers. Your heart is racing and you enjoy the adrenaline.
Return focus: You like mysteries. You can tolerate surprises and surges of emotion.

Remember: what feels safe in the short term may be eroded by inflation over time.

Don’t put all your eggs in one basket

The old saying “don’t put all your eggs in one basket” perfectly captures the main point of diversification. In investing, risk is at its highest when you have all your money in one investment. If that one share or investment performs badly, your entire portfolio may be at risk.

Read more about diversification

A one-time investment or regular monthly saving?

There are two main ways to invest, and you don’t have to choose just one.

A one-time investment means that you invest all you have available in one go. This can be compared to buying a gym membership for a full year. This can make sense if you have spare cash available. A one-time investment could be a good choice if you don’t want to commit to regular saving or if the amount you can invest each month varies.

Monthly saving builds your portfolio gradually. By investing the same amount regularly, you automatically buy more when prices are low and less when they are high – a bit like putting 50 euros in the tank every time you stop for fuel. It’s a practical way to spread risk over time.

How often should you review your plan?

This depends on your goals – monthly or annually can both work. At least, you should revisit your plan whenever you reach a goal or your circumstances in life change.

Start simple and improve over time

An investment plan might sound like a big project, but it’s actually a small effort that pays off many times over. You don’t need to be an expert to begin. It’s enough that you know your direction and take the first step.

Keep in mind that the best investment plan is one you actually follow. Start simple and improve your plan over time. Take your time to go through the seven steps we have listed above. Once your plan is ready, you’re going to be much closer to reaching your goals than you think.

Important information about investing

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