5 Essential Steps to Setting Investment Goals

Setting goals serves as a pillar to success in every area of life. As we age, plans tend to get more serious and essential. At the heart of it, our goals align with feelings of happiness and fulfillment, which often relate to our finances. Getting professional investment management in San Antonio, TX, is the best way to reach your goals.

Find a reliable Texas financial advisor who can help you align with your goals and create a solid action plan. 

Get in sync with your money and note these five critical steps to setting investment goals that you can put into action with financial planning support. 

1. Determine what you want your money to do for you.

Give your money a job, so to speak. That job can be helping you to achieve your financial goals. Your money can work for you and potentially earn more as you reach specific benchmarks by diversifying your income, saved wealth, and assets. 

Choose investments that align with your goals, risk tolerance, and time horizon, knowing that this can be reassessed and altered as needed. No financial plan should be set in stone since your goals may change or as the economy shifts dramatically from time to time (lessons learned from Covid-19). Experienced wealth advisors can rebalance your investment portfolio based on economic conditions.

2. Identify and categorize your goals.

Short-term Goals (Six months to five years)

Investing for events that will happen in a few years or less is considered short-term. In setting a shorter benchmark, you should focus more on preserving your money with low-risk investments, such as high-yield savings accounts and money-market funds. 

You won’t bank ample funds, but money will be accessible when you need it. Plus, you can maximize your interest rate versus a traditional bank savings account.

Mid-term Goals (Five to ten years from now)

For goals five to ten years from now, you may be able to afford more risk, depending on your tolerance for it. Some prefer to stay with safer investments, but for those with a higher tolerance for risk, you could potentially earn better returns by allocating small portions of your portfolio to high-quality stocks through an exchange-traded fund (ETF). 

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When planning for investments ten plus years out, you can allow additional risk. If retirement is just around the corner, high risk is not advisable. For those retiring well down the road, you have plenty of time to make up for any possible losses. 

Stocks can be an excellent investment for long-term goals within a diversified portfolio. You should explore different securities that align with your faith and/or values. Common long-term options include a basket of stocks through ETFs and mutual funds. Historically speaking, index funds can earn around 10% annualized returns. 

Target-date funds make sense for saving for a child’s college education or retirement goals. For example, a 2045 target-date fund can be invested aggressively now and gradually shift asset allocation to lower-risk investments as the benchmark date nears. 

3. Set a realistic target date for each financial goal.

Be as specific as possible with your dates, knowing that you can adjust dates over time. For example, if you have an infant you hope will be going to college in 2038, you have a feasible target date for a college savings goal. 

Let’s say you want to tour Alaska for your 10-year wedding anniversary. In that case, you know what timeframe you’re striving toward. If you know you will be retiring by 2050, at your full retirement age, if you are 39 now, you have plenty of time to invest with higher risk. 

4. Prioritize your goals into wants versus needs.

It helps significantly prioritize goals into critical, need, and want categories. Establishing an emergency fund in the short term is considered critical. A need could be paying off your mortgage, a long-term goal. 

On the other hand, a short-term want could be trading your car to upgrade to a newer model. A long-term want could be saving up for a lavish vacation when your child graduates from college. 

5. Know how much you need to save versus what you have.

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If you have retirement savings in a 401(k) or 403(b), IRA, Roth IRA, or IRA, those should be included in your retirement-related goal. If some of your goals do not yet have funds associated with them, that’s alright. Just having the goals will serve as a solid roadmap to financial achievement.

For example, if you plan to move to Florida or Texas to retire in five years and buy a home with $20,000 down, divide that by 24 months to see that you need to save $833 per month. By assessing your finances, you can see if that goal is feasible.

In Summary

At the end of the day, these five investment goals incorporate the SMART acronym that you may already be familiar with. 

  • Specific – each goal should be clear and as straightforward as possible
  • Measurable – how will you know when you’ve achieved a goal if you do not have benchmarks set?
  • Achievable – practical action is needed to achieve your goals 
  • Relevant – determine if your goals are realistic and relate to you and your lifestyle 
  • Time-based – to track progress, set a timeframe for each goal 

A wealth manager at PAX can help you with goals-based investment decisions and financial advisory services.

Biblically Responsible Investing (BRI): Feeling Good About Your Investments

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing(“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such.

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