The Fundamentals of Investment Planning

January 12, 20246 min read
The Fundamentals of Investment Planning
Share on facebookShare on TwitterShare on Linkedin

Key Takeaways

  • An investment plan is a tool used in financial planning for developing an investing strategy to achieve financial goals. 
  • Making an investment plan begins with assessing one’s financial goals and ends with investment and regular monitoring of holdings.
  • Investors with a plan have the structure to sustain confidence throughout market fluctuations.

While one cannot predict the future, if one is going to invest, one should have a plan. Such a plan, of course, can be revised along the way, as life and markets dictate. But what is an investment plan, and how is one constructed? Here are the fundamentals of investment planning.

What is an Investment Plan?

An investment plan is a tool used in financial planning for developing an investing strategy to achieve financial goals. 

As a critical part of the financial planning process, an investment plan informs investment decisions and can improve the chances for favorable returns.

Investment planning, then, is the process of identifying financial goals and creating a strategy to reach them.

Why is Making an Investment Plan Important?

To many people, investing can seem complicated and perplexing. This can cause prospective investors to eschew investing altogether. While every investment carries risk, understanding investment fundamentals can promote creation of an investment plan. Such a plan can help one achieve financial goals.

Investment strategies permit investors to weigh all objectives. Investors can use such strategies to assess how much capital they can invest and still meet other financial responsibilities. Investment plans gauge and evaluate any risks.

Investment strategies help investors stick with a plan. When a market experiences a downturn, for example, investors who are unprepared may withdraw from their assets. Investors with a plan, though, have the structure to sustain confidence throughout market fluctuations.

Investment planning can be instrumental to gaining financial freedom. Such planning can help individuals generate income, minimize tax liability, and budget expenses. Further, making an investment plan can help ensure financial security and safety for the investor and their family. 

Objectives of Investment Planning 

An investment plan basically helps one structure how much capital is allocated to asset classes such as stocks, bonds, and alternatives, to maximize returns. 

Fundamental investment objectives really come down to the trio of safety, income, and growth. The trick is to find the right balance. After all, the success of one objective can come at the expense of one or two of the others.

Steps in Making an Investment Plan

Making an investment plan begins with assessing one’s financial goals and ends with investment and regular monitoring of holdings. Here are several steps to making an investment plan:

  1. Assess one’s existing financial situation. That means determining how much money one can afford to invest and how liquid one wants their investments to be. Note that some investments require a large upfront sum.
  2. Assess their risk tolerance. Because there is more time to recoup losses, those who are new to investing may have a higher risk tolerance. By contrast, an investor who has, over a long period, already crafted a portfolio, may be less amenable to risk.
  3. Establish time-based goals. It is now time to set the outcomes one wants — and when one would like to see them. During one’s investment period, possessing a plan based on one’s time horizon can improve decision making.
  4. Select the investments. Now, one can determine which investment types and asset classes align with one’s financial state, risk tolerance, and goals. Consider all the investment types stocks, bonds, and alternatives such as art and real estate.
  5. Monitor one’s investment progress. Periodically, investors must assess where they are, and whether they are on track with their goals. They must track investing progress over time and, as necessary, adjust. Note that short-term investments generally require more active attention than longer-term investments.

Explore further with this 7-step guide to investment planning.

Art as an Investment 

Increasingly, making an investment plan includes the art market. For nearly a generation, the market has become more accessible and transparent, due in part to the Internet. 

In 2020, during a global pandemic, the contemporary art market alone appreciated by 15.1%, according to Art Basel. During years such as 2008 and 2018, when nearly all traditional asset classes lost money, it was art that performed well. 

The asset class has global marketability and can improve returns. Art also has low correlation with constantly fluctuating public markets, which can reduce portfolio volatility.

There are a number of ways to invest in art, including through the alternative platform Yieldstreet. Private-market alternative investments, which includes art, comprise asset classes other than stocks and bonds. Historically, over every downturn of nearly the last two decades, private markets have outperformed stocks.

Yieldstreet, on which $4 billion has been invested to date, offers the broadest selection of alternative asset classes available. That includes highly vetted and curated opportunities in art. For example, Yieldstreet’s art equity funds enable investments in art without the responsibilities that come with owning physical works. They also do not require a high level of art market expertise.

Investing in art also serves another crucial purpose — diversification. Building a modern investment portfolio of varying asset classes with differing expected performances can mitigate risk and even improve returns.

Invest in Art

Make your portfolio a masterpiece by investing in art.

Alternative Investments and Portfolio Diversification 

Alternative investments can be a good way to help accomplish this. Traditional portfolio asset allocation envisages a 60% public stock and 40% fixed income allocation. However, a more balanced 60/20/20 or 50/30/20 split, incorporating alternative assets, may make a portfolio less sensitive to public market short-term swings. 

Real estate, private equity, venture capital, digital assets, precious metals and collectibles are among the asset classes deemed “alternative investments.” Broadly speaking, such investments tend to be less connected to public equity, and thus offer potential for diversification. Of course, like traditional investments, it is important to remember that alternatives also entail a degree of risk. 

In some cases, this risk can be greater than that of traditional investments.

This is why these asset classes were traditionally accessible only to an exclusive base of wealthy individuals and institutional investors buying in at very high minimums — often between $500,000 and $1 million.  These people were considered to be more capable of weathering losses of that magnitude, should the investments underperform.

However, Yieldstreet has opened a number of carefully curated alternative investment strategies to all investors. While the risk is still there, the company offers help in capitalizing on areas such as real estate, legal finance, art finance and structured notes — as well as a wide range of other unique alternative investments

Moreover, investors can get started with a relatively small amount of capital. Yieldstreet has opportunities across a broad range of asset classes, offering a variety of yields and durations, with minimum investments as low as $10,000.

Learn more about the ways Yieldstreet can help diversify and grow portfolios

In Summary

Whether determining, or considering art as an investment, making an investment plan first is key. After all, a well-constructed investment plan can help produce income and lower tax liability, among other benefits. It can also lower risk through diversification, which is key to long-term investing success.

We believe our 10 alternative asset classes, track record across 470+ investments, third party reviews, and history of innovation makes Yieldstreet “The leading platform for private market investing,” as compared to other private market investment platforms.

1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

3 "Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. “Term" represents the estimated term of the investment; the term of the fund is generally at the discretion of the fund’s manager, and may exceed the estimated term by a significant amount of time. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

4 Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

5 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

6 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments, excluding our Short Term Notes program, weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 18th, 2022, after deduction of management fees and all other expenses charged to investments.

7 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Alternative Income Fund before investing. The prospectus for the Yieldstreet Alternative Income Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetalternativeincomefund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

8 This tool is for informational purposes only. You should not construe any information provided here as investment advice or a recommendation, endorsement or solicitation to buy any securities offered on Yieldstreet. Yieldstreet is not a fiduciary by virtue of any person's use of or access to this tool. The information provided here is of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of this information before making any decisions based on such information.

9 Statistics as of the most recent month end.

300 Park Avenue 15th Floor, New York, NY 10022

844-943-5378

No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice, except for specific investment advice that may be provided by YieldStreet Management, LLC pursuant to a written advisory agreement between such entity and the recipient. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.

Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefore.

Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.

Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.

Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.

Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and are willing and able to accept the high risks associated with private investments.

Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.

YieldStreet Inc. is the direct owner of Yieldstreet Management, LLC, which is an SEC-registered investment adviser that manages the Yieldstreet funds and provides investment advice to the Yieldstreet funds, and in certain cases, to retail investors. RealCadre LLC is also indirectly owned by Yieldstreet Inc. RealCadre LLC is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Information on all FINRA registered broker-dealers can be found on FINRA’s BrokerCheck. Despite its affiliation with Yieldstreet Management, LLC, RealCadre LLC has no role in the investment advisory services received by YieldStreet clients or the management or distribution of the Yieldstreet funds or other securities offered on our through Yieldstreet and its personnel. RealCadre LLC does not solicit, sell, recommend, or place interests in the Yieldstreet funds.

Yieldstreet is not a bank. Certain services are offered through Plaid, Orum.io and Footprint and none of such entities is affiliated with Yieldstreet. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Investment advisory services are only provided to clients of YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.

Read full disclosure