What is an investment priorities plan?

An IPP is a way to decide which financial goals you should focus on first. It’s basically a roadmap that helps you put your money into the things that matter most to you, in the right order.

Instead of doing everything at once an IPP can help you match your investments to your goals, how much risk you’re comfortable with and when you need the money. For example, you might want to focus on building an emergency fund, before beginning to invest. 

An IPP, can help you manage your priorities like ISAs, pensions, savings and paying off debt, while also making the most out the tax benefits that come with each product.

Having an IPP can also help you stay on track. It encourages you to make clear decisions, rather than react to market changes or spreading your money too thinly.

Unlike a general investment plan, which looks at what you could invest in, an IPP focuses on what you should do first, and why.

An IPP usually starts with a list of your financial goals that you group into short, medium and long-term. So, for example, a short-term goal might be saving a specific amount for a rainy-day emergency fund, and a long-term goal could be to save for your retirement.

Each goal is then matched with an investment approach that fits with how soon you need the money, how easy it is to access, and how much risk you’re willing to take. Short-term goals usually focus on lower-risk, easy-access options, whereas long-term goals may allow for higher-risk investments that can have the potential to grow over time.

If you’re unsure which options may be suitable for different goals, our guide to types of investments, explains some of the main investment choices and how they work.

An important part of the process is understanding your risk tolerance, and how comfortable you are with the value of your investments going up and down. This can help guide your decision on which type of investment or savings product is suitable for each goal.

In some cases, you might also decide to look at market or sector trends to decide where to invest, especially if you’re considering long-term goals.

You should then put your goals in order of importance. This will help make sure that the essential needs are covered first, before you focus on building wealth or investing for your future. 

There are a few reasons why you should consider an IPP, such as:

• It provides clear direction for your money, helping you focus on what matters most.
• It reduces impulsive or rushed decisions by giving you a structured approach.
• It helps you work towards multiple financial goals at the same time without conflict.
• It improves overall financial planning and decision making.
• It supports better risk management by allocating money based on each goals needs
• It offers flexibility, so you can adapt your plan as your life priorities change

But there are also a few things you should consider before making an IPP, like:

• The fact it can take a lot of time and effort to set up and maintain.
• It may feel restrictive if your priorities change quickly.
• There’s a risk of over-planning and missing new opportunities.
• It relies on assumptions made about the future, which can change over time.

Understanding time horizons is a key part of an IPP. Financial goals tend to be grouped into three stages: short term (under 5 years), medium term (5-10 years), and long term (10+ years).

Short-term goals focus on money that you might need soon, so they’re usually linked to low-risk easy access products, like cash savings or cash ISAs. The aim there is to protect your money and not expose it to any market risk.

Medium-term goals can be more flexible allowing for a more balanced approach. With a longer timeframe, you can take a measured or calculated risk to help your money grow. So, you might mix savings and investments, like having a Stocks and Shares ISA alongside safer assets like cash savings.

Long-term goals are centred around growth over time. So, with 10 or more years to invest, you can typically take more risk, as there will be time to recover from market downs and ups. Investments like pensions which are designed to be invested till you retire are a good example of this.

Choosing the right approach will depend on your goals, timeframe and attitude to risk. Our guide to investment strategies explores different ways investors can build and manage their portfolios.

Getting this structure right can help you sequence your priorities effectively. It ensures that short-term financial stability is protected, while still allowing you to pursue growth and financial goals with confidence. 

IPPs help financial advisers build strategies tailored to your personal circumstances. They clearly set out your goals in order of importance, meaning advisers can then create a plan that matches your needs, timeframes and attitude to risk.

Advisers will play a key role in helping you understand your risk tolerance, help you set realistic goals, and choose suitable products based on your needs. This makes it easier to avoid mismatched decisions like taking on too much risk for short-term goals.

Professional advice also helps ensure your plan is tax-efficient and compliant with UK regulations. This can include making the most of pensions and ISAs, alongside other allowances, to help your money grow more effectively over time.

To find out more about how we could help you, check out our investment advice page.