How to set investment goals is important for you to easily know what your money is invested in. You can use the investment money as funds to buy a house, education, or even retirement and vacation. By setting investment goals as follows, you can also determine the most appropriate strategy for the best results.
Simple Guide on How to Set Investment Goals for Long-term Goals
1. Determine What You Want to Achieve
The investment goals you think about and set aren’t just one, so start writing down what your goals are. For example, do you want to invest to buy a house in 5-7 years? Or do you want to prepare funds for your child’s education in 10 years and retirement funds in your 50s?
You can also set investment goals for a vacation abroad, for example for the next 1-3 years. Ask yourself what you need and want the most, then think if it’s really important. Prioritize goals that really need to be prioritized and avoid being distracted by goals that are not too important.
2. Set a Timeframe
You should know that investment goals have a timeframe, divided into three; short, medium, and long. Usually for a short term (less than three years), the goal could be a vacation or buying a vehicle. While the medium term (more than three years but less than five years) could be for a house down payment.
Investment goals for young adults can also be determined for the long term, which is more than five years. For this timeframe, the investment goal is usually for children’s education or retirement. By determining the timeframe and your exact goals, it’ll be easier for you to choose the most suitable investment instrument.
3. Know Your Risk Tolerance
After determining your investment goals and timeframe, you need to understand your own risk tolerance value. Every investment certainly has risks, but these risks can be large or small. There are times when investors have used all their money but do not get the results they expected.
Get to know your risk profile by determining whether you are a conservative, moderate, or aggressive investor. By considering your comfort level in investing, this will affect your choice of investment instruments. Adjust your risk tolerance with your investment choices in order to get higher results according to your expectations.
4. Develop an Investment Strategy
How to set investment goals examples also include diversifying as one of the safe strategies. You can reduce risk by investing your money in several instruments such as stocks, gold, and mutual funds, or others. Continue to monitor the progress of these investments and make sure you make adjustments to your portfolio as needed.
5. Seek Professional Advice
In setting investment goals, you may be a beginner and a layman in this matter. So there’s nothing wrong with consulting a financial advisor to get direction in creating a personal investment plan. After that, don’t forget to review your plans on an ongoing basis to continue to align goals with your investments.
How to set investment goals can be a motivation for you to save consistently and with discipline. With clear goals, you can build a future by avoiding unnecessary expenses. In addition, setting goals also enables you to manage risk better.
