What types of investment goals should I set?
You are more likely to achieve your investment goals if you set a realistic and achievable time frame in which to get there. In doing this, you are taking the first steps towards controlling your own future.
You may have more than one investment goal - and different time frames in mind. These factors, together with the amount of risk you're prepared to take, will drive your investment strategy.
In investing, time is your most valuable asset. The longer your money is invested, the more chance you have of reaching your investment goals because you can take advantage of compound interest (if your investment is one that bears interest). Time also tends to smooth out the ups and downs of the market, and reduces the risks.
Short-term investment goals
Something you want in the next 1-3 years is usually defined as a short term goal. An example might be an overseas holiday to recharge your batteries, a brand new car, or unpaid leave. Generally, stable and more conservative investments like cash are used to achieve short-term investing goals.
Medium-term investment goals
Maybe you want to put a deposit on a house or set up a business in the next 3-5 years. This is a medium-term investment goal. Generally, a mix of conservative and income-producing growth investments are used to achieve medium term goals.
Long-term Investment Goal
If your goal is over 5 years away, it's generally considered a long term investment goal. An example may be saving an amount for your children's education, a holiday house or your retirement. Generally, long–term investors are willing to invest in growth assets such as shares or property.
Learn more about Basics
- When should I start investing?
- What types of goals do I need for investment setting?
- What are diversified investments?
- Where to invest: What are the investment asset classes?
- What are the investment traps?
Did you know?
It’s never too early to start investing money. In fact the earlier you start investing, the more time you have in the market to increase your chances of higher returns on your investments.
The best way to avoid investment traps is to seek professional financial advice. However, it’s a good starting point to be aware of the more common investing mistakes.
