The Importance Of Setting Goals With Your Investment Capital

The Importance Of Setting Goals With Your Investment Capital


Long term investing, including via managed funds can be a good way to save for your future. Setting investment goals can help an investor assess how one’s investments are tracking.

There are various ways one can set investment goals. The options below all have validity. However one decides to set their goals, the important thing is that goals are indeed set. This gives the investor a way to manage performance, as well as motivate the investor to achieve his or her stated goals. Goals can then be re-assessed and tinkered with if necessary, by reviewing along the way.


Benchmarking is a good way to peg your investments to comparative investments. The performance of popular indices can be a useful guide for assessing the performance of one’s own investments. For example, an aggressive investor might compare their returns against the ASX All Ordinaries Accumulation index, while a more conservative investor might assess their investment(s) as compared to the overall market (eg the ASX All Ordinaries Index).

Outright Return Goals

Some investors may have specific targets in mind – e.g. 10% per annum. These need to be framed with current deposit or government bond rates in mind (i.e. goals should be higher than one can ordinarily attain elsewhere). Measure such goals after one year, or your specified timeframe. See how you performed, but also look at how the overall market performed. If you outperformed or underperformed, see if you can ascertain why. Then assess whether your current strategy is on the right track, or whether changes need to be made. Be certain that a drastic change is indeed needed, before you do such a thing.

Above Average Returns With Limited Risk

This might mean buying only large blue chip stocks from the ASX50, at times when they have a high yield, thus ensuring a likely good distribution, with a lower than average overall risk (as compared to investing across the whole market). Waiting for markets to drop, or correct, takes discipline. Goals would also more likely need to be measured over a longer timeframe. Perceived higher yields need to also be viewed with caution, as companies can elect to reduce or eliminate dividends if they deem this appropriate.

Long Term Financial Goals

While some investors may like to evaluate their investments by comparing them against the performance of other investments, most of us invest because we have personal goals and ambitions that good returns can help fulfill. These might include paying for a holiday, saving a deposit for a second property, paying for children’s education, or retiring early.

Having a specific goal in mind may help some people stay focused on the reasons why they are investing, along with their determination to succeed in achieving this goal.

Overall, having goals can help shape behavior in order to set out to achieve them. Goals should be readily measurable or clearly identifiable, so that one can be sure if success is being achieved.

Whatever way of setting investment goals one chooses, it is imperative that performance is then periodically measured, to ensure that one is on track, so that these goals are realised.

Share Trading and investing give power to an individual to work towards personal financial goals.