Set Goals before Starting Investments

We all do investments, but before making any investment decision, it is important to set clear financial goals. Financial Goals are our objectives which are based on our aspirations, risk tolerance, and timeline. Setting financial goals leads to clear-cut direction, helps track the portfolio, and increases the chances of achieving desired results. Let’s understand the reasons for setting financial goals in more detail before making any investments.

 

1. It gives Clarity & Focus:

Setting financial goals gives clarity in our investment strategy. It enables us to recognize what we want to achieve and why. Whether it's saving for buying a home, investing for kid’s education, retirement or even starting a venture, having specific goals helps us to stay focused on what matters most.

 

2. They are Personalized:

Financial goals are unique to each person. They depend on factors such as age, income, expenditure, risk tolerance and deadline. By setting our own specific goals, we can optimize our investment approach accordingly. For example, for short-term goals, we should focus more on preserving the principal amount while for a long-term goal, we need to adopt a strategy that can beat inflation.

 

3. We can Measure the Progress:

Setting financial goals helps us to measure our progress. We can decide on a benchmark based on which we can track your investment performance. By regularly reviewing our goals and evaluating progress, we can also rebalance it based on our investment strategy, so as to ensure that it stays on track and we are able to achieve our desired financial goals.

 

4. It Motivates & keeps us in Discipline:

Setting financial goals acts as a purpose, which motivates us to constantly save and invest. When we have a clear perspective of what we want to achieve, it's easier to make financial decisions that suit those goals. Goals also create discipline. Investing in goals prevents us from investing emotionally or copying others which can derail our long-term plans.

 

5. Helps to manage Risk:

Financial goals help us to manage risk effectively. By understanding our goals, we can assess the level of risk we want to take and make a thoughtful investment decision. Balancing risks and returns becomes more attainable when we have a clear financial goal. In that situation, we can plan our investment options with a reasonable risk profile.

 

And Finally:

Setting financial goals before investing is the first step toward building a successful financial future. This gives us a clear direction, focus, and motivation and guides us to optimize our investment strategy. Reviewing and evaluating our progress regularly ensures that we remain on the right track and do necessary rebalancing along the way. By aligning our investment to our financial goals, we can increase our chances of achieving desired results.

It would be better to take assistance from a Financial Expert to set clear financial goals before starting your investment journey. He will also provide you proper guidance and planning to make your financial journey smooth and successful.