How to Set Investing Goals?
To attain financial success through investing, it is vital to have a goal set. While setting a goal, you should always remember to keep them achievable. Setting attainable goals helps you think clearly or focus better on them. In turn, you could create a financial plan to which you can hold on and motivate yourself until you reach your goal.
When you set an investment goal, you should determine the course of action to achieve it. You should know the answers to:
- How to invest money?
- Where to invest it?
- When to invest it?
- How much time do you need?
What is a Good Investment Goal?
A good investment goal should be measurable, attainable, suitable, and time-bound. Let’s get into the details here.
- Measurable: Investment goals are quantifiable since a fixed amount is attached to them. You can see how close you are to reaching yours.
- Attainable: It is of immense importance how attainable is the financial goal you have set. Setting an achievable goal lowers your motivation.
- Suitable: A good investment goal should be suitable for you and your lifestyle. It should be relevant to your values and needs.
- Time-Bound: To provide some sense of urgency, you should keep your goal time-bound. It will help you calculate exactly how much you need to save to achieve the goal.
Let us take an example here. You have to go on a vacation trip with your best friend in 2023, and you need Rs. 25,000 for the trip. Now, you have a particular goal and know the exact purpose of it and how much you want to save. It is easily measurable and achievable considering your monthly income. It is also suitable for your personal value of friendship, and it’s time-bound.
How to Set an Investment Goal?
As much as understanding what a good investment goal is, it is equally relevant to know how you can set one. Here are a few steps necessary to set and achieve your realistic financial goals.
Step 1: Pin Down Your Goal
Before going any further you should identify your goal. Why do you need to make this investment? Mostly, it will be for a dream home, retirement life, children’s education, or wedding. Identify your goal and create an investment plan to reach it.
Step 2: Choose Your Investment Strategy
You should choose the type of investment you want, depending on your time horizon. If you want to attain short-term investment goals that can be achieved in less than three years, you should look for a savings deposit, recurring deposit, gold investment, treasury bills, or money market accounts. You should be aware of the interest rate they offer, the tenure, and the charges associated with it.
If you are looking for long-term investment goals that can be achieved in more than 5 or 10 years, you can choose Fixed Deposits (FD), Mutual Funds, stock market, equity funds, ETFs, and others. If you choose an FD, you should know the bank’s FD interest rate. If you are choosing Mutual Funds or stocks, you should be aware that they have market risks.
Step 3: Start Small
If you are a new investor or someone who is more risk-averse, it is best to start small and get a better understanding of the process. You can gradually build your investment portfolio.
Step 4: Find the Support
Looking for the advice and support you need to reach your financial goals has never been easier. With the internet becoming universally accessible, you can look for the right kind of financial advice about investing and other topics on social media pages, websites, youtube channels, etc.
Don’t think you can rest once you set your financial goal and build your investment portfolio. To make sure you are on the right track, it is important to track your progress occasionally. Don’t stress too much as it could make you take emotional decisions with your investment portfolio. And, you should be flexible enough to change the investment strategy if you find it not working.
