The first thing you need to consider is why you are investing – what do you want to achieve? Investing without a specific purpose will result in random investments that do not deliver what you need.
Think of it like going shopping without making a list or planning. You are likely to make plenty of purchases but perhaps not what you really needed. You will probably waste money on impulse purchases. The same principle applies to investing. You need to work out what you want from your investments before you can look into what you need. Think about what you want or what you need and turn that into specific goals.
A deposit for a home
Paying your mortgage off
Additional income for retirement
Reduced working hours
The list goes on.. but your goals must be personal to you.
Next you need to consider the time-frame in which you want to achieve your goals:
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.
These are the first steps required before you can start to develop your investment strategy.
NOTE: Be realistic and try not to have too many goals, especially within the same time period. You are far more likely to achieve your goals if you write them down.
You are far more likely to achieve your goals if you write them down.