Your investment objectives
Someone once said, "If you don't know where you're going, how are you going to get there?" Your first step as a potential investor should be to decide what you want to accomplish with your money and when you want to accomplish it.
Your investment objectives are part of your personal investment strategy, which will help you select the right investment products and the right mix of assets to meet your financial goals.
What do you need from your investment portfolio, and when do you need it?
You may have many financial goals - to make a down payment on a house in two years, to help pay for your children's education in ten years and to prepare for your retirement fifteen years after that. You might already be retired and simply want your money to earn a reasonable return and provide a reliable source of income for many years to come. Whatever your situation, take a few minutes to sit down and think about where you are now financially... and where you want to be in the future.
Here are some questions to ask yourself
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How much money do you have to invest now?
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Will your employment income allow you to invest additional money in the future? How much? Are you confident that will continue?
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What are your monthly financial obligations? How much do those obligations change from month-to-month or year-to-year?
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Do you have other valuable assets that will play a role in your financial future?
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Do you have outstanding debts that you would like to pay off?
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Do you plan to make any major purchases in the future?
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Do you need money from your investments each month to supplement your regular income? If so, how much?
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Do you have dependents to care for? Will their needs be changing over time?
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Have you considered your life and property insurance requirements?
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Are there income tax considerations that are particularly important to you?
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Are you a participant in a retirement savings plan or registered pension plan?
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Do you expect to inherit money at any point in the future?
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How much money would you like to have readily accessible in case of emergency?
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Good financial advisers will discuss these issues with you. They will want to ensure that they have a clear understanding of your financial situation and your investment goals. Take a look at our know your adviser section, which includes information about choosing an adviser.
If you are a younger investor with a stable income, you may decide that your primary investment objective is to grow your assets over a long period of time. Investors approaching retirement may be more interested in ensuring that their assets are safe and retired investors may look to their investments mainly to provide a regular, reliable income.
Your investment objectives are influenced by your personal risk tolerance. Take our risk test to gauge your comfort with risky investments and learn more about factors that impact your personal risk tolerance.
No two investors are exactly alike and no single investment product or strategy is right for everyone. To invest successfully you must first think through exactly what it is you want to accomplish and what resources you have available to make it happen.
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