If you start investing without thinking about your goals, you will end up investing in the wrong things, you might actually find that investing isn’t what you need to deliver your goals at all.
Think of it like going shopping without planning your meals and making a list. You will come home with plenty of food but not always what you need to make a good meal. You will also probably waste money on a lot of things you didn’t even need.
The same principle applies to investing, you need to work out what you want from life before you can look into what you need. Think about what you want or what you need and turn that into specific goals.
Firstly what is it you want or need to achieve, for example:
To get married
A deposit for you first home
Paying your mortgage off
Have additional income for retirement
To retire early
Stop working 9-5 Mon-Fri
Pay for your children’s education
Support children’s home deposit
The list goes on.. and must be personal to you!
Next you need to think about when you want or need these things to happen.
IMMEDIATE TERM: 0 – 2 years
SHORT TERM: 2 – 5 years
MEDIUM TERM: 5-10 years
LONG TERM: 10+ years
…and then finally think about how much money you will need to make it happen.
Thinking about what you want, when you want it, and how much you need to achieve it, will help you develop your goals. This is the first step you need to take before developing your investment strategy.
TIP: Be realistic and try not to have too many goals, especially within the same time period.
A recent study found that you are 42% more likely to achieve your goals if you write them down.