The importance of setting clear investment goals

Creating a realistic plan for achieving your investment goals within a certain time frame

No matter where you are in life, you probably have financial goals you want to achieve. Planning your investment goals is essential if you’re going to have a real chance of achieving them. To begin setting your own goals, it’s good to gain an understanding of the things you need to afford now and would like to afford in the future. You will need to consider factors such as your income, age and future outlook, all of which will influence your motivations for investing. When investing for your financial future, you are essentially allocating your money to an asset that is created with the intention of allowing your money to grow over time. The wealth you create can be used for a variety of objectives such as meeting shortages in income, saving up for retirement, or fulfilling certain specific obligations such as repayment of loans, payment of tuition fees or purchase of additional properties or other assets in Cardiff. While the gains from investing can be greater than from saving, the value of investments can go down as well as up. It’s well worth taking the time to think about what you really want from your investments. Knowing yourself, your needs and goals, and your appetite for risk is a good start. 1. GOALS Be clear about what you’re investing for. Investing is generally most appropriate for medium and long-term goals (at least five years). If you want access to your money before that, you might want to think about saving instead. 2. PAYMENTS Before you start investing, first make sure that you can afford your essential living costs, as well as any debts. It’s also a good idea to make sure you have some savings to cover emergencies. 3. INVESTMENT RISK Have a think about how much risk you feel comfortable taking with your money. You should also consider your other financial commitments when deciding how much risk to take. If you don’t want to or can’t take any risk with your money, then investing may not be for you right now.

BE CLEAR ABOUT WHAT YOU’RE INVESTING FOR. INVESTING IS GENERALLY MOST APPROPRIATE FOR MEDIUM AND LONG-TERM GOALS (AT LEAST FIVE YEARS). IF YOU WANT ACCESS TO YOUR MONEY BEFORE THAT, YOU MIGHT WANT TO THINK ABOUT SAVING INSTEAD.

4. TIMESCALE The longer your money is invested, the more opportunity it has to grow in value and reach your goal. Each year, not only will the money you invest potentially grow in value, you’ll also potentially get growth on any previous growth. This is commonly known as ‘compounding’, and over longer time periods it can make a significant difference to the value of your investments. 5. WHAT YOU’LL GET BACK The final value of your investments will depend on three main factors: how much you pay in, how your investments perform, and how long you’re invested for. Generally speaking, the more you pay in, the better your investments perform. And the longer you can keep your money invested, the more you're likely to get back at the end. 6. MIX IT UP Putting all your money in one type of investment can be a risky strategy. You can help reduce that risk by spreading your money across a mix of investment types and countries. Different investments are affected by different factors: economics, interest rates, politics, conflicts, even weather events. What’s positive for one investment can be negative for another, meaning when one rises, another may fall. 7. BE TAX-EFFICIENT You can do this by putting your money into your pension or using up your Individual Savings Account (ISA) allowance. 8. REVIEW, REVIEW, REVIEW Make time to regularly review your investments to check they’re on track to meet your goals.