5 steps to Goal-setting on your investment journey

One of the most popular questions we get from our readers is:

How can I be Financially Free?

“Know how to set goals and then follow these through till you realize financial freedom.”

This may seem like a feat at first but be assured it is a totally achievable one.

Fortunately, it’s never too late to become an investor. But getting in the right mindset by chalking out a financial goal is taking that first step.

And this is a far more complex exercise than scribbling a goal down on a piece of paper.

Here is a roundup of our top five steps to establishing your wealth goals:

1. Know Why You Want to Invest

Understanding the purpose of your investment gives you greater clarity on establishing the right investment goals. Is it your child’s education, buying a new home or retirement?

2. Factor in “Life”

The current pandemic has reminded us more than ever that unexpected challenges such as family wellbeing, health etc. can wreak havoc even to the best plans. Review your current financial situation, noting how you have managed money to this point and the steps you’re willing to take to achieve that list of goals. Setting investment goals certainly demands a dose of realism and our best bet is to factor “life” into our goals. If the plan doesn’t match your reality or your goals, throw it away and start over.

3. SMARTen your Goals

A good way to determine your investment goal is to classify them as per three parameters:

Age 2. Income 3. Outlook

Age can be further sub-divided into three distinct segments: young and starting out, middle aged and family building and old and self-directed

Use these parameters to set the ‘SMART’ financial goals:

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  1. Specific: Make your goals clear and precise. Add a value or number to it.

  2. Measurable: Set your financial goals in a way so that you are able to measure your progress.

  3. Achievable: Set attainable targets.

  4. Relevant: Tag your goals to specific milestones you want to achieve in your future life.

  5. Time-based: Assign a hard timeframe for each set goal.

  6. Reassess: This is an additional parameter we have added to the SMART goals. Reassess your progress regularly to help you stay focused and comfortably on track to achieve your financial goals.

4. Understand Your Risk Tolerance

A key aspect that goes into creating wealth is understanding your risk tolerance. This can change over time. By setting investment goals, you are better prepared to face any issues arising from market turbulences etc. and also an understanding of when to rebalance our portfolio.

5. Establish an Investment Policy Statement

Consider creating an investment policy statement that helps to keep your goals in check. It can include

  • Specific goals and investment
  • Strategies that will help you to achieve your goals
  • Return expectations and time-frame
  • The amount of risk you are willing to take
  • How your plan to track your portfolio and whether you need to rebalance it.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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