Investment goals: 3 steps to beginning your investment journey

Setting investment goals begins with defining what exactly it is that you want to achieve. This should go well beyond just a vague target in your mind.

Having clearly a defined investment objective and writing it down, provides you with clarity and can help keep you on track.

When setting out to determine what exactly your investment goal is, it’s important to keep things realistic and ensure your goal aligns with other factors in your life, such a family and personal circumstances.

Once you have decided what exactly your objectives are, it’s time to devise a plan and consider some key investment characteristics, including:

Short-term financial goals could be planned over a one-year period, long-term may be a 10 to 20-year horizon. The timeframe in which you want to achieve your investment goal will help ascertain the sort of assets you invest in.

Your personal risk appetite will depend on your personal circumstances and will also determine the type of assets you may choose to invest in.

Another major consideration when degerming what investments best suit you will be cash-flow requirements and the frequency of that potential cash-flow. Assets such as shares, may pay quarterly dividends, while a term deposit may only pay interest at maturity.

Retirees, for example, may require ongoing income, whereas investment income may not be as important for someone with stable, well-paid employment.

Different asset classes have different levels of liquidity. When devising a plan, investors should consider their personal need for liquidity. How quickly might you need to have your capital returned to you? This is another key considering when considering investments.