How to set Investing Goals


Goal setting is a crucial step towards achieving financial success, particularly when it is about investing. Set goals that are specific and achievable can help you concentrate your efforts, develop plans, and remain engaged throughout the journey.

In this article will help you understand how important goals are, and what is an investment goal that’s worthwhile and the questions you should consider when setting goals as well as the future steps to take.

  • Set goals for investing can give you clarity, inspire you, and enable you to design strategies to attain financial success.
  • A great investment objective is SMART, which means specific, measurable, realizable pertinent, time-bound, and timely.
  • When you set your investment goals it is important to think about your time frame and risk tolerance, your understanding of investment and other elements that could affect your goals.
  • You’ll need to utilize different strategies for investing to achieve short-term, medium-term, and long-term objectives.
  • When you’re working toward your investment goals, keep track of your progress to determine if you’re needed to alter your approach.

What is the reason why Goals are Important?

Research has demonstrated the importance of setting goals to achieve successful financial results. A well-known case that is still cited is a study that was conducted in 1979 by and for MBA students. From the MBA graduates just three percent had written goals and plans for achieving them, while 13 percent had goals that were not written and 84% did not have goals whatsoever.

After 10 years, students with no goals earned on average twice as much as students without any goals. The tiny percentage of students who had written goals earned 10 times the amount of all the students. 1

Goals can be beneficial in getting financial success, for example, giving you a clear idea of the goals you have set, providing motivation, and establishing the right strategy to follow. When it comes to investing setting goals can assist individuals in taking the first step towards something that is like something new or daunting to them.

“We often hear from our customers–especially our younger customers–that getting started with investing is a very nerve-wracking part of the experience,” said Kelly Lannan, senior vice president of emerging customers with Fidelity Investments, in an email interview with The Balance. “With the many options available to invest, and the possibility of market volatility, novice investors are likely to feel overwhelmed.

“That’s why it is important to set a goal first. When you set an objective, you can determine the path to reach it, which includes what, when and where to put your money and how long you will are able to devote or require.”

What is a good investment goal?

The most popular method of determining what experts advise for setting goals is to use SMART Goals. It’s a mnemonic tool which means:

  • Particular: The setting of a financial target is about determining the amount you intend to save as well as the reason you’re planning to use it for.
  • Measureable Goals for financial success are usually easy to gauge. They are accompanied by a dollar figure associated with them, and you’ll be able to easily see how close you are to achieving your goals.
  • Reachable:While it’s okay to create ambitious goals, setting targets that aren’t feasible can reduce your motivation, and take resources away from goals you’re able to achieve.
  • Important:A good investment goal must be aligned with your overall goals and your values.
  • time-bound:Attaching an expiration date for your goal does not just give you the feeling of urgency, but also allows you to calculate precisely how much you’ll have to put aside monthly or every week to reach your desired goal.

Questions to ask when setting Your Goals

When you’re setting your financial targets, you should consider a few important questions to consider asking yourself in order to create an investment plan and make sure your on the correct path. We talked to Taylor Jessee, a certified financial planner (CFP) and head of the financial planning department of Taylor Hoffman Wealth Management. Jessee asked some questions that investors could ask themselves

What should I do with this money?

It is important to be clear about your financial goals and know exactly what you’re saving for.

“For example, is it for buying a house, sending a kid to college, [or] saving for retirement [that] is years or decades in the future?” Jessee stated. “In general, it is best to separate your money into different buckets for different goals, because your investment approach should be different for each.”

What time do I expect to Be in Need of this money?

Your time horizon is the amount of years that you’ll need to wait before you decide to use your investment funds It’s an essential aspect of establishing the plan of investment. A longer time frame your more active you could afford to be with your portfolio.

What Risks Am I Afraid of?

While general guidelines may apply to the majority of investors, every person has their individual level of risk and portfolio of investments must reflect the risk tolerance of each individual.

“There are no guarantees when you invest (in anything, not just the stock market), so [think about] how much you are comfortable losing if it doesn’t turn out the way you hope,” Jessee stated.

What else could this money Can It Be Used To?

While investing is an effective way to achieve your financial goals earlier but it’s essential to ensure that you’re not putting your money in danger which you might need to fund something else. For instance, although your emergency account could be earning an insignificant amount of interest from an account for savings but it’s not the kind of money you’d like to risk with more risky investment options.

Do I know what I’m Investing In?

Whatever is within your portfolio of investment It is essential to be aware of the investments you’re in. If you’re investing in individual stocks, you must know the names of the companies and be acquainted with their financial status. If you are dealing with mutual funds be aware of the fund’s objectives and fund manager’s investment strategies.

How to set realistic investing Goals

It’s simple to discuss what’s important to establish goals. However, actually taking the necessary steps to achieve and set those financial targets is another thing completely. Below, you’ll find the steps you can follow to establish realistic goals for investing.

1. Set Your The Goal

The first step towards reaching what you want to achieve is to determine the specific goals you wish to accomplish. Common investment objectives are retirement or an education for your child in college or even a dream house. Understanding your goals and making it SMART will allow you to develop a plan for investing to get there.

2. Identify Your Investment Strategy

When you’re considering how you’ll put your savings to work towards your purpose, remember to think about your time-horizon.

As per the Financial Industry Regulatory Authority (FINRA) the short-term goals – those that can be achieved within less than 3 years may be the best fit for the most liquid investments, such as the cash market, Treasury bills, and money market accounts.

If you are looking for mid-term goals that are 3 to 10 years from now, you can divide your portfolio with high-quality fixed-income investment and stocks.

If you have goals for the long term that are longer than ten years away You can choose the more aggressive route, investing in mutual funds as well as ETFs. (ETFs)

3. Start Small

In a recent survey conducted by Fidelity 36 percent of Gen Z adultswho didn’t trade during the market’s volatility in the Q1 of 2021 would be more at ease trading when they can do it by using only a small amount of cash. 4

According to Lannan making a minor change to the investor’s strategy will make their goals seem more doable.

“For newer investors, and for those who may be more risk-averse, it may be best to start small and get a better understanding of the process,” Lannan stated.

4. Find the signs of support

Finding the guidance and help that you require to achieve your financial objectives has never been simpler. Numerous social media sites offer detailed financial advice on investing, as well as other subjects. Many investing platforms offer educational materials on their sites to help investors begin their journey. If you’re someone of color looking for advice on your finances or are a financial expert you are, CHIP Professional provides free online and in-person assistance that include Black as well as Latinx financial experts along with professional membership programs that are paid as well as networking opportunities and much more. 5

How to measure your progress

The work doesn’t end once you’ve set your financial goals and create your portfolio of investments. It’s essential to keep track of your progress to make sure you’re in the right direction.

“The easiest way to track and measure progress toward goals is to use an app or online financial planning tool,” Jessee explained. “Not to oversimplify, but with these tools, you can input your current assets, how much you’re saving, and the dollar amount of financial goals you want to achieve (i.e., college, retirement, buying a vacation home), and the tool will generate some kind of score or graph to show you whether you’re on track.”

When you evaluate your progress towards achieving your goal, you must be ready to alter your plan if what you’re doing doesn’t work. In many instances you might need to alter the way you invest or your savings every month.