Making Investment Goals

Are you an investor who’s been just going with the flow, not really sure where your portfolio is headed? Then, it’s time to set some investment goals and give your portfolio some direction! Not only will it bring you peace of mind, but it will also help you achieve financial success. Here are the top 5 reasons why having investment goals is so important:

1. Goals give your portfolio some direction: Without goals, it’s easy to get lost in the stock market and not know where you’re headed. Setting goals gives you a clear direction to follow and helps you make informed investment decisions.

• Goal setting helps you identify what’s important to you: When you set investment goals, you’re forced to think about what’s truly important to you financially. Is it saving for retirement? Building a nest egg for your children’s education? Once you know what’s important, you can make investment decisions that align with those values.

• Setting goals helps us measure progress towards success: How do you know if you’re making progress if you don’t have any goals to measure against? Setting investment goals allows you to track your progress and see how far you’ve come.

• Goals help you stay motivated: The stock market can be a rollercoaster of ups and downs. Having investment goals in place will help you stay motivated during the tough times and remind you of why you started investing in the first place.

• Setting goals keeps you accountable: When you set investment goals, you’re committing to achieving them. This keeps you accountable to yourself and ensures that you’re taking the necessary steps to reach your financial goals.

Once you’ve decided to create some investment goals that will propel your success, you should also determine how to refine those goals to make them SMART.

SMART goals are:

• Specific: Setting a specific financial goal requires identifying how much you plan to save and the purpose you plan to save it for.
• Measurable: Financial goals are often easy to measure. There’s a specific dollar amount attached to them, and you can clearly see how close you are to reaching yours.
• Achievable: While it’s okay to set lofty goals, setting goals that aren’t achievable can lower your motivation and pull resources away from other goals that you can reach.
• Relevant: A good investment goal should align with your broader goals and values.
• Time-Based: Attaching an end date to your goal not only provides some sense of urgency but also helps you calculate exactly how much you need to save monthly or weekly to achieve the goal.

Here are some examples of SMART investment goals:

• Specific: “I want to save $50,000 for a down payment on a new home within the next 2 years.”
• Measurable: “I want to increase my retirement savings by 10% in the next 12 months by contributing an additional $500 per month to my 401(k).”
• Achievable: “I want to diversify my portfolio by investing in 5 new stocks within the next 6 months.”
• Relevant: “I want to invest in socially responsible companies that align with my values by researching and investing in 2 new companies within the next year.”
• Time-based: “I want to achieve a consistent 8% annual return on my investment portfolio within the next 3 years by implementing a new asset allocation strategy.”

Making investment goals is important for all types of investors, whether you’re a seasoned wealthy investor or even if you’re a novice just starting out. So, make some goals and put your portfolio on a stable foundation.