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6 Tips On How to Establish Investment Goals

by Caldwell Trust


The journey to financial liberty is quite a long one, as it requires so much planning and evaluation. Knowing how to set investment goals is significant as it helps you to take notice of where you have been, where you currently are, and where you are heading towards.

Investment goals generate a form of accountability that thrusts you to keep evaluating the process frequently, thereby invoking the discipline needed to keep you on course. Here are six practical steps to establishing investment goals:  

Related Blog: When is the Right Time to Start Investing Your Money?


1. Know Why You Want to Invest

It is always crucial to know why you want to invest your time in something. Your ability to point at clear-cut reasons on why you want to invest not only helps you to establish the right goals, but also remain focused as you make headway.

2. Set Realistic Goals 

Setting investment goals demands a dose of realism as unexpected challenges such as health issues may arise along the way. You should leave room for life realities as you never know what events can occur in the coming years. 

It would be best if you worked with a realistic budget so that your goals stem from what is coming and what is going out.

3. Apply The SMART Goals Format

When setting goals, using the ‘SMART’ format is always a good way to organize and set achievable goals that make sense. Here’s a rundown of how it works:

Specific: Make each goal clear and precise.

Measurable: Set a goal in a way so that you are able to evaluate yourself and see if you are succeeding or not. It’s not useful to have goals you can’t measure to see if things are working.

Achievable: It will be helpful if you make real and attainable goals as well as devise practical ways to help you achieve the goals.

Relevant: Your goals should be able to relate well with your current and future life.

Time-based: Assigning a timeframe for each set goal helps you to keep track of your progress. It also allows you to make adjustments where necessary in case you do not meet up with your set target.

4. Understand Your Risk Tolerance

In this case, the risk may be termed as the fluctuation in your assets' worth with time or portfolio volatility. The risk may be experienced emotionally at a personal level. For instance, there might be seasons when you get afraid that you may not be able to attain your goals or may lose your life savings. 

Understanding your risk tolerance is crucial when setting investment goals as it informs you of how ready you are to face any arising issues and then plan according to what you can achieve. It is also good to understand that effective investment goals call for sacrifices since failure or delay may have an immediate and direct impact on your lifestyle and intended investment.

5. Establish an Investment Policy Statement

An investment policy statement helps to keep your goals in check. It should state: 

  • Specific goals and investment
  • Strategies that will help you to achieve your goals
  • Return expectations and time-frame
  • Detailed information about the amount of risk you are willing to take
  • Guidelines on the kind of investments you need to make as well as how easy-to-get your finances should be
  • How your assortment will be tracked and why or when it ought to be rebalanced

6. Monitor Your Progress

Once you have your investment policy statement, keep scrutinizing it to know how well you are doing and what you can do to achieve more so that you do not get overwhelmed by anything and lose focus.

The centerpiece is that you can do more and should do more to establish an investment plan for your future. Setting up a plan, establishing good habits, and adhering to your set goals sets you up for tremendous success.

At Caldwell Trust, we have several years of helping individuals and families with investment and money management. Contact us today to learn more about our services and how we can help you and your family secure your future.

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