11 Nov Three Crucial Tips for Setting Your Investment Goals
In order to make your investments work for you, clear objectives need to anchor your investment plan from the outset.
The task of setting investment goals differs from person to person, and varies according to a myriad of factors. Barring this, this article hopes to highlight the key tips that can be useful to everyone in the endeavour of investing for all our different financial goals.
Before we begin, it is important that you should have already given thought to drafting a plan for your investment journey.
Committing your money to investment tools just for the mere sake of jumping on the investment bandwagon can eventually backfire, this is even akin to heading through life without plans or a direction.
Keeping to an investment plan provides the assurance of realistically being able to finance your life goals, a plan additionally provides you with the motivation to stick to your short and long-term goals.
Dive in the details
Your investment goals need to be specific from the very beginning, this ensures that your aims are indeed feasible given your financial capabilities. Accurate goals also serve as a motivation for you to work toward achieving the returns you wish for.
What purpose does investing serve for you? Growth will naturally be an important factor, most of us will wish for our investment returns to increase with time.
Apart from this then, stability in investments might be an additional core consideration for some.
Should you be investing with the aim of withdrawing a large sum in the near future, the investment tools that you select will have to be equipped with the ability to do so.
Delving into the nitty gritty when planning also includes the task of allocating your investment capital. Ambitious goals amount to nothing if insufficient funds exist to back them up.
Attaching a specific capital amount to the investment tools in your portfolio helps you to take only the steps that are feasible and realistic toward reaching your goal.
Having a clear idea of the amount of capital that you are willing to commit to your investments on top of the returns that you expect from it will aid you in drafting the right investment plan tailored to your needs and abilities.
Categorising your investment goals into short, mid and long-term ones will help you in keeping track of your progress toward reaching them.
Keeping your goals divided by time period will give you a better idea of the investment methods that are most suitable to fulfilling them.
Your shorter-term aims might necessitate investments with greater ease of liquidity, allowing you to cash out at the exact time that you need the funds.
Goals set further into the future on the other hand, such as investing for your child’s tertiary education, can benefit from the interested accumulated over the longer time period in between.
Taking in the factor of time will help you to divide your grand investment plan into steps that are easier to tackle and thus more achievable.
Your Risk Tolerance
Falling short of your financial goals, especially at times where you are in urgent need of funds, such as in retirement, can be detrimental.
Seeking advice from a financial advisor to determine your risk profile right in the beginning will aid you in selecting the appropriate investment tools suited to your temperament and goals.
You may lean towards either being a conservative or aggressive investor, or find yourself in between those margins. However, it is important that your risk appetite is ultimately in tandem with the goals that you have set.
Let’s say that you are naturally an aggressive investor with a high-risk threshold, but have unfortunately left retirement planning till a later stage. Having to play catch-up to reach this goal, you should be making safe investments rather than higher-risk ones which you might originally be more inclined toward.
As evident, your capacity and ability to take risks depend not only on your personal traits, but the goals that you are looking at, as well as considerations of your time horizon.
Create Your Plan
Jumping into investing without a plan essentially multiplies your chances of making haphazard investments.
You could be investing time and funds, but alas with the prospect of still falling short of your goals.
On top of this, an investment portfolio can be tricky to manage on your own, especially for an investor who might just be starting out.
An experienced financial advisor might be able to offer you the necessary expertise and help needed to build an investment portfolio customised to your life goals.
Give our investment planning page a visit today, and we welcome you to contact us for a free consultation!