An investment plan would determine how much of your assets should be invested. It is designed to ensure your investments are aligned with your expectations. It would help identify and clarify your objectives, which may include having the required assets to preserve your financial independence for your lifetime.

An investment plan would provide you and your advisor the parameters within which to construct your ideal portfolio. It would identify which investments are appropriate for you based on your investment experience, tolerance for risk and objectives.

The first step is to understand why you want to invest. Everybody has their own reasons, whether it's to build retirement wealth, buy a bigger house, start a business or put children through school. Once you've established realistic goals, you can go about calculating how much wealth you'll need to accumulate.

If you are saving for a vacation, a new car or a downpayment for a home, your time horizon will be fairly short. If less than two years, concentrate on money market and short-term bond funds. While these funds are unlikely to provide substantial gains, they typically exhibit lower volatility, and are highly unlikely to decline significantly in value.

For longer-term goals such as retirement, a greater concentration in equity funds is typically recommended in order to increase the growth potential of your portfolio. Equity funds are subject to a greater degree of volatility over shorter periods, but have historically provided higher rates of return than other investments.

The amount of investment risk you're willing to take will have a huge impact on your financial plan. If you can tolerate a higher degree of risk, you could potentially experience greater long-term investment growth - but you also increase your chances of having your portfolio go down in value, especially over the short term.

It's important to diversify. Your portfolio should include the three basic asset classes - cash, fixed income and equities. This way you have some protection from downturns in any one type of asset, while taking advantage of a wider range of potential returns.