Setting Investment Goals & Financial Goals
The financial goals are those that we have to achieve by working towards them. You have to make your money work and the goals are achieved by setting small investment goals. Investment goals should be set depending on the financial goals you want to achieve.
Financial planning is required to achieve your financial goals.
The second step is to set up investment goals that will help you achieve your financial goals. Investing goals show the path.
Rules for setting financial & investment goals
The four rules to follow while setting financial and investment goals:
Identify the time frames in which you want to achieve your goals. Goals can be short-term or long-term. For example, short-term goals can be buying a new car and long-term goals can be a child's higher education or retirement. Goals are ends and you must look to those ends for means.
Goals are achievable if they are broken into smaller milestones because this makes it easy to monitor them. For example, if you are planning to retire in 30 years then you should be able to monitor the progress of your funds every year. Goal setting should be granular and broken into monetary milestones.
To achieve your goals and make them meaningful you should tag them with investment goals. You should focus on the appropriate investments. For this, you should have clear-cut goals like a child’s education, retirement, international trip and more. You should match your investment plans to your pre-defined goals otherwise it is unlikely that you will be able to achieve your goals.
Goals are about the returns and also the risk. Therefore you should focus on optimizing your risk-reward ratio. If you are planning for the long-term or medium-term then you should consider the liquidity and tax efficiency of your investments.
You should also monitor your loans, debt and risk coverage. The success of financial planning depends on how you set and monitor your goals.
