Goals based investing: give yourself the best chance of success

 12 April 2021
Goals based investing: give yourself the best chance of success

Defining clear goals for your investments will help you plan, budget and choose the right investments for you. Your goals might be around enhancing your current lifestyle, future planning for your family, or financing your retirement.

 

The best time to start is now

The sooner you start investing, the better off you will be. Match your long-term investment goals with your short-term lifestyle aspirations. When you have created your goals and time frames, then you can define your budget. To help you stick to your budget, look at your cash management and put strategies into place. Be realistic about what you can afford to put aside for your investments, and keep a cash reserve just in case. 

 

What do you want from your investments?

It’s well worth taking the time to think about what you really want from your investments. Knowing yourself, your needs and goals, and in particular, your appetite for risk is a good start. Here’s a checklist to help you get started. 

1. Create Medium and Long-term Investment Goals

Be clear about what you’re investing for. Investing is generally most appropriate for medium and long-term goals (at least five years). If you want access to your money before that, you might want to think about saving instead. Don’t tie up all your money if you might want to move house or make a major purchase - successful investing is a long game, not a short sprint. 

2. Affordable Payments

Before you start investing, make sure that you can afford your essential living costs, as well as any debts. Debt is expensive, so it’s best to pay that off first. It’s also a good idea to have some savings to cover emergencies or unexpected life events.

3. Investing Involves Risk 

How much risk do you feel comfortable taking with your money? The degree of risk will very much depend on your and your circumstances. You should always consider your other financial commitments when deciding how much risk to take. If you don’t want to or can’t take any risk with your money, then investing may not be for you right now. 

4. Investment Timescales

The longer your money is invested, the more opportunity it has to grow in value and reach your goal. Each year, the money you invest potentially grows in value. You’ll also potentially get growth on any previous growth. This is commonly known as ‘compounding’, and over time, it can make a significant difference to the value of your investments. This assumes, of course, that you reinvest any gains you make. 

5. What You’ll Get Back

The final value of your investments will depend on three main factors: 

  • How much you pay in

  • How long you’re invested for

  • How your investments perform

Generally speaking, the more you pay in, the better your investments perform. The longer you can keep your money invested, the more you're likely to get back at the end. 

6. Mix It Up

The old saying “Don’t put all your eggs in one basket” is a good mantra for those looking to invest for the first time. Putting all your money in one type of investment can be a risky strategy. You can help reduce that risk by spreading your money across a mix of investment types and countries. Different investments are affected by different factors: economics, interest rates, politics, conflicts, even weather events. What’s positive for one investment can be negative for another, meaning when one rises, another may fall.

7. Tax-efficient Investments

Investing can also reduce your annual tax bill. Putting your money into your pension or using up your Individual Savings Account (ISA) allowance are both tax-efficient ways to invest. 

8. Review, review, review

Make time to regularly review your investments to check they’re on track to meet your goals. How your investments perform depends on multiple factors, so it is a good idea to keep an eye on their performance, but not to stress out about the inevitable dips and dives of the stock market. It can also help to have a financial advisor look over your investments with you. At Panthera Wealth, for example, we offer regular annual reviews of your investment portfolio, to check you are still on track towards your investment goals. 

9. Remember the Key Investment Caveats

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

 

Want to talk about investing?

We’re here to help. Contact us to arrange your initial consultation, to talk through how we may be able to help you make the most of your current investments and explore other options too.

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Paul is extremely personable and puts you at ease. He was able to listen well to our concerns & advise & guide us accordingly. His help has been invaluable and has refocused our minds on achieving our goals & dreams.

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