How to Outline Your Financial Goals
June 12, 2017
People save and invest to improve their quality of life. However, it is easy to make mistakes that can cause stress and cost you money. You can avoid those mistakes and keep your investment on track by outlining your financial goals.
It is a common investment mistake for investors to have no idea why they are investing. So, you should ask yourself…
Why are you investing?
Do you know why you are investing? What are you going to do with your money? What is most important in your life?
“Making money” is not a good enough reason to invest. How do you see yourself spending your money in a year? Five years? Ten years? If you can clearly explain your goals, you have taken the first step toward making your own investment plan.
With that in mind, write down your financial goal. One simple sentence is all you need. For example, you can write “buy a home”, “pay for college,” “start a business,” or “retire as a millionaire!”
Next, write down the amount of money you think you will need to accomplish your goals.
Don’t worry about trying to fit in every little cost. You can always revisit your target later when you check your performance. Focus on your goal, and try to write down a target number.
This number will be different depending on your goal. For example, maybe you’re buying a $100,000 home, you may want to save $10,000 for a down payment. Maybe you need $5,000 to start a business or $50,000 to pay for college. If you don’t have much money to invest, you can make up for it by investing over a long period of time.
Finally, consider the importance of your investment goals. How important is your retirement, your kid’s college tuition, or your down payment on a house? The importance of your investment will give you an idea of your risk level.
Every investment has risks.
You don’t want to take too many risks. However, you need to take some risks to earn a reasonable return. Also consider the amount of time you will be invested. If you have more time to invest, you may be able to take risks and still catch up if you run into trouble.
Ask yourself if you are ready to invest before you move on. Be honest with yourself.
You may not need to invest your money. Would you be better off paying off your debt? Can you afford to just save your money rather than invest it? Make sure you can commit enough money and time to investing.
It is important to stay motivated toward your goals and keep them in mind when you invest. Every investment decision you make should move you closer to your goals. You should be willing to learn, improve, and work toward your goals as you invest.
If you can stay committed and keep that motivation toward your investment goals, you are much more likely to succeed!
A. Michael Hayes, Jr
You can learn more about how to achieve your financial goals at my website, Great-Mutual-Funds.com.