Goals-based investing

Helping you to make wise financial decisions

Investors today are bombarded with an overwhelming number of choices and investment options. With so many options available, it can be difficult to determine which one is the best fit for your individual needs. This is where goals-based investing comes in.

Goals-based investing is an investment strategy that focuses on achieving specific financial goals. This type of investing can be used to reach a variety of financial goals, such as retirement, buying a home or saving for a child’s education.

You need to set financial goals to help you make wise financial decisions, and also as a reward for your efforts. Goals should be clear, concise, detailed and written down. Unwritten goals are just wishes.

There are many benefits to goals-based investing, including:

1. Improved clarity on what you’re trying to achieve: When you invest with a specific goal in mind, you will have a clearer understanding of what you need to do in order to reach that goal. This can help you stay on track and make better investment decisions over time.

2. Greater focus on the long term: With goals-based investing, you are less likely to be swayed by short-term market fluctuations. This can help you stay invested for the long haul and avoid making impulsive decisions that may not be in your best interests.

3. Enhanced discipline: Having a specific goal can help you maintain a disciplined approach to investing, which is essential for success over the long term.

4. Increased motivation: When you have a concrete goal that you’re working towards, it can be motivating and encourage you to stay the course even when times are tough.

But in order to achieve all of your goals, you will need a plan. Starting from assets you already have available, you will need to determine how much more you need to accumulate and when you will require it.

Increase your chances of financial success
There’s no one-size-fits-all answer to the question of how to set goals. However, there are some basic principles that can help you get started.

The first step is to decide what you want to achieve. This may seem obvious, but it’s important to take the time to really think about your goals. What do you want to accomplish in the short term? What are your long-term goals?

Once you’ve decided what you want to achieve, you need to set realistic and achievable goals. That means setting goals that are specific, measurable, attainable, relevant and time-bound.

Your financial and personal goals need to be as specific as possible, because otherwise they won’t give you enough direction to follow through. Look at your goals like a lamp lighting the way – the brighter the light, the clearer the road ahead. If you don’t have clearly defined goals, you procrastinate. Think about your life and what you want to achieve, and what action you need to take to achieve the outcomes you want.

Give yourself realistic deadlines. Adding specific dates, amounts, etc. makes your progress quantifiable to complete your goal and visualise a finish line.

Be honest with yourself and set realistic goals. Decide what you want to accomplish. So, start with the goals that are highest on your priority list. It’s easy to be overwhelmed by everything that needs to be done, so start simple.

Align your goals with the direction you want your life to take. Balancing the alignment between long term and short term will give you the focus you’ll need.

Having a finish line will mean you’ll get to celebrate when you accomplish your goal. Having set deadlines gives you a sense of urgency that is lacking when goals are open-ended.

Setting realistic goals
Each goal will be assigned an amount, an investment period, a level of risk and an order of priority. Do you have the means to make additional investments necessary to accumulate the required assets to achieve your goals? Don’t neglect to consider the effects of taxes on your savings and investments.

After considering the foregoing, you might determine that you can achieve some goals in less time. Or you might find that it could take longer. The time horizon is important to setting realistic goals.