Setting goals - Investments & advice

Setting goals

Before you start investing, it's important to define your goals. What do you want to achieve and when do you want to achieve it?

It is important to work out how much time you have to reach a goal so you can determine what type of investment will best help you achieve it.

Goals generally can be classified as:

short-term - one to three-year time horizon
medium-term - three to five-year time horizon
long-term - five-year plus time horizon.

For example, investing for a deposit on a house generally requires a short-term return. Investing for retirement requires a longer-term option. Your financial goals may include:

saving for a home
saving for children's education
planning for retirement
estate planning
financial security.

Keep in mind, the earlier you start to invest the better off you will be. As well as having more time to accumulate wealth, you will benefit from compound returns on your earlier investments - you'll not only earn interest on the money you contribute, but also on the cumulative interest earned on those funds. That is, interest on interest.

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