Why Set Goals?

“If you don’t know where you are going, you’ll end up somewhere else” are the unmistakable words of baseball coach Yogi Berra. Although he was no investment expert, within his unusual reasoning is a serious point, especially where investing is concerned. Without investment goals, you could be guilty of bumbling along and hoping for the best – and hope is not a strategy.

Setting investment goals is essential in smart investing.  The start of a New Year is a great time to review your personal investment goals.  There is some practical advice below to consider when thinking about your own goals.  Becoming a smart investor is not difficult, particularly where you use the service of an Authorised Financial Adviser (AFA).

Ultimately, money helps you do what you want to do in your life whether that means a specific purchase or a comfortable retirement.  Knowing how much you need, by when, will help you set your investment goals and develop an investment plan or strategy, or for that matter, plans, suitable to you to achieve your goals.   Of course, the biggest risk if you don’t set goals is that you’ll end up somewhere else!

How to set smart investment goals?

By smart we mean smart as in ‘intelligent’and smart as in S.M.A.R.T – Specific, Measurable, Achievable, Realistic and Time-bound.

Specific – Start with defining the outcome you want e.g. “I want to retire on $120,000 p.a. after tax in today’s dollars”.  The point of which, of course, is to be able to cover your costs comfortably and allow for you to spend on travel, perhaps visiting some of your grandchildren in the Northern hemisphere!  An alternative may be that in five years’ time “I want a deposit of $100,000 for a house purchase”.

Measurable – Let’s make sure your goal has a clear result or several clear results, over time, which can, simply put, show whether (or let’s be more positive, when) you have succeeded.

Achievable – To be achievable your goal needs to be consistent with your financial situation and, as such, will be based on how much you have available to invest, and whether you will be able to add to it, or need to deduct from it for any reason.  And you should ensure you have a short-term emergency fund set aside too so there is no impact of short term financial pressures on your goals.

Realistic – It’s unrealistic setting a goal of, say, future return performance of 20% p.a. but not wanting to take on any risk.  Your financial goals need to be realistic in terms of the risk you can tolerate and the type of investments you are happy to hold.

Time-bound – Be clear on the time you have available to invest or to contribute to your personal investment and reassess your goals, at least each year.  Many investment expert commentators, including our own at Milford Asset Management, talk about ‘time in the market’ rather than ‘timing the market’ to be a powerful force in successful investing.  Anyone with knowledge of the power of compounding will appreciate that point.

How to get started?

One way to get started is to call on an Authorised Financial Adviser who can help you set down your personal investment goals and develop an investment strategy based on your goals, financial position, risk tolerance and preferences to achieve those goals.  At Milford Private Wealth we have a team of Authorised Financial Advisers experienced in identifying the right investment strategies for our clients based on these factors.  Not only do we help with advice for clients investing over $500,000, but we offer ongoing management of your investment strategy and ongoing reviews of our advice and your strategy as your circumstances change over time.  To learn more about Milford Private Wealth and Milford’s other investment solutions please click here or contact us on 0800 662 345.  You should also ‘search’ some of Yogi’s quotes.  They are unique!