Designing your investment game plan requires much thought. Sadly, few investors actually have a co-ordinated game plan.

And why is that? Investors spend too much time picking investments and too little time establishing investment policies. The ones the game plan will follow to reach the personal goals.

The first question many investors ask their investment advisors is what’s a good investment today. However, taking this kind of advice often results in a collection of “flavour of the day” investments. The ones you don’t want.

Rather, make investment selection the last item on your list. Park your money for a couple months and put together the appropriate investment policies. Particularly, your asset allocation decisions.

I highlight six major topics to help design your investment plan:

1. The expectations
Estimate your desired retirement income goal, in today's dollars. Then calculate the size of portfolio to reach and sustain that goal.

Next, ballpark your investment rate of return required to attain the retirement nestegg target. Treat this rate of return as your “minimum investment yardstick” for the investment plan.

2. Investor profile
Determine which type of investor profile fits you. The most familiar ones are guaranteed, conservative, balanced, growth, aggressive and speculative.

The majority of investors can live with 40% to 60% in equities and the remainder in fixed income instruments. A mix for a balanced investor profile typically allocates 50% to stocks, 40% to bonds and 10% to cash instruments.

3. Asset allocation
Asset allocation decisions, among asset classes such as stocks, bonds and cash, have the greatest impact on your portfolio than any other factor. Investments ought to be in a variety of asset classes that don't all move in the same direction.

Occasional rebalancing assists as markets drift. The rebalancing strategy sells overperforming assets and buys the underperformers.

4. Diversification
Diversification is associated with your investment time horizons. Geographical diversification is also important, typically by making allocations to Canadian, US and global investments.

Asset mix decisions provide the biggest form of diversification. Limiting single investments, say a stock, to a maximum of 4% to 5% of total portfolio value is also prudent.

5. Risk matters
Understanding the three major investment risks brings perspective to your game plan. The ability to take risks, the willingness to take the risks and the need to take risks.

Be mindful of investment quality versus income yield. The reductions in yields during the past four years make it tempting to sacrifice quality.

6. Control the variables
Pay attention to all the investment costs of buying, holding and selling. Particularly the ones that don’t send you invoices. Such as the management expense ratios and deferred sales costs.

Lastly, performance has been over emphasized to exhaustion. A portfolio with emphasis on consistent returns serves you better in the long run than one which emphasizes hot performance.

Those are my six considerations. I suggest capturing your appropriate policies in a written investment plan.

A blueprint for your financial house. Your investing experience will begin to change.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.