Setting your Investment Goals

Setting Investing Goals

Goals could play a key role in your investing journey. Goals are not only beneficial to achieving your ambitions, they can help you to invest. It is imperative you set your own goals, so you can build your investments around what you want to achieve. Setting your investment goals could help you to maximise your chances of success when investing.

How to set your investing goals:

Your investment goals can be achieved in just a number of simple steps:

  1. Determine your aims
  2. Consider any factors which could impact those aims
  3. Set SMART goals

Effectively, you need to take your aims and ambitions, consider the factors which will impact them and turn them into SMART goals which you can use to guide you on your investing journey. Below, each step is explained in greater detail to help you to set those goals:

1.    Determine your aims

When you begin to think about investing, or even if you have already started, then you are likely to have some sort of idea of what you want to achieve. It could be small and simple. It could be bold and ambitious. Either way, it is a reason for wanting to invest. That aim you have is something you can turn into a goal that you can achieve.

You should determine your reasons for investing so you can set those goals. Having those reasons gives you a purpose. They give you something to work towards, which can be beneficial for motivating you to achieve your goal. Having that purpose is important for setting your investment goals to match your aims.

In short, if you determine your purpose and your reasons for investing, you can begin to turn them into goals.

2.    Consider factors which could impact your aims

Upon determining your aims, you should take into consideration the influences which could impact them. You want your goals to be tailored to you, so you should try and account for the different factors which could affect the goals you set and how you achieve them. Therefore, it is important to consider the following:

Risk and Return

When you consider what you want to achieve, risk is a key element of that decision. Every investment has risk so it is important you know just how much you can invest, and therefore how much you can afford to lose. The level of risk which you determine must be right for you. Risk is an important consideration because it will help you decide on how realistic and achievable your goals can be.

If you don’t have the level of risk to match your goals, you aren’t going to achieve them. Your investments simply won’t return the right level of rewards for your aims. When you actually invest, you will have to choose relevant investments which help you to meet your aims. It may mean you have to adjust your goals around your level of risk.

Time Horizon

When you set your goals, they will fit within a specific time zone. However, it is important to consider your own investing timeline for when you set your goals. Having goals for short, medium- and long-term goals is fine, as long as they match your own time horizon.

You want to set goals which match what you want to achieve over time. Setting short term goals when you are looking at retirement could prove detrimental to your overall success. The goals you set must be suitable for your time-frame of investing to give you the best chance of success.

Financial situation and Budget

Your financial situation is key to your investing journey. In an ideal world, you would be somewhat stable with your finances and have some savings or an emergency fund in case anything goes wrong. The last thing you want is to be relying on money which is tied up in investments. Therefore, once you have an idea of your financial situation, you can begin to set goals which match your ambitions. You can set specific and realistic goals to match the amount you can invest.

When you do decide how much you can budget for investing, you want to consider the amount you invest and the impact it will have on the goals you set. Investing small amounts and aiming for the moon is next to impossible. You need to set goals suitable to your budget. Additionally, will that be lump sum or regular investing, and how will that impact your goals. If you’re investing once a year, you can probably expect different returns from your investments compared to if you were investing in them often. You need to manage your expectations based on the money you invest and how you will be investing it.


Tax could affect your end results and how you achieve your goals. There are options to invest tax free, and you should be considering them in order to maximise your returns. However, if you do go over on the tax-free allowances, then you need to consider if it impacts the attainability of your goal within your given time period.


When you invest, there will be costs. Costs are inevitable, either through account fees, management fees or trading fees. They could have an impact on your returns and therefore may impact how you achieve your goals. Similar to tax, you should consider the impact which costs will have on the goals you set.

Additional factors

There could be additional factors which you may want to consider. You may want to think about your personal life, your lifestyle, and your family amongst other things and how your aims could affect them. Take your time to map out anything which you need to consider as you invest your money. You want your goals to make sense for you and your situation.

3.    Set SMART Investment Goals

When it comes to setting your investment goals, they should be SMART. SMART goals are:

Specific, Measurable, Attainable, Realistic and Time-Related.

They allow you to create goals which clarify your ideas and provide a suitable focus on your investing journey. SMART goals help in building a better strategy and give you a greater chance of success. When you set vague goals, they don’t provide you with a sense of direction. It is almost pointless working towards goals which are unachievable and/or offer you nothing.

SMART goals enable you to make the right decisions, pick up the correct habits and behaviours and use your time and resources to the greatest effect for the highest chance of possible success.

S – Specific

Goals should be precise for what you want to achieve from investing. Specific goals provide you with a mission statement, encompassing your whole vision into a purpose. Your goals should be well defined and give vital context to what you are hoping to achieve. They have to be clear to you and should be within your capabilities, using a suitable time-frame to achieve them.

You have to consider what you want to accomplish from your investments, and why that is important to you. Knowing what you wish to achieve will put you on track to working towards meeting your aims. Having that reason for investing will keep you motivated and disciplined, and the specific goals you set will help you focus on making the right decisions.

M – Measurable

The goals you set need to be measurable. It means you must be able to put data or metrics to your goal which can be used to track progress. Fortunately, when it comes to investing, you can use numbers – amounts of money, percentage gains, growth rates etc. to justify your goals. Investing goals can be measured using sufficient data from the investments you choose. A measurable goal is useful because:

  • It allows you to track your progress
  • You know what is working and what needs fixing
  • They enable you to make suitable changes to your strategy/plan
  • It helps you know when you have achieved your aims

A goal needs to be measurable so you can understand how you are performing and if you are going to achieve it. Otherwise you are unable to track your goal and the progress you are making towards it.

A – Attainable

When setting your investing goals, you must know that you can reach these goals. They must be achievable in one way or another. You need to be able to understand if they are possible for you meet these goals, and to know exactly how to do so.

You must determine if you need to develop your skills, behaviour, and attitudes in order to achieve them. Also, you need to understand if you have the resources available. These goals must be within your capabilities, even if that requires learning new ideas. It also means considering any limitations, and the effect they will have on your chances of success.

All in all, you must be able to dedicate the right amount of time and effort, as well as having the right tools, skills, and resources to be able to achieve these goals.

R – Realistic

Your goals should be representative of your own needs. Your goals must be worthwhile for the time and effort you do end up putting into them. Goals need to make sense and should be realistic for you and your situation. There should be actual benefit attached to reaching your objective, giving you a solid purpose which you can actually achieve.

Don’t set the bar too high, otherwise the goal will never be achieved. These goals must be right for you and you need to have control over them. Otherwise they are unrealistic. They need to be within the capabilities of your own resources, knowledge, and time, and therefore within your reach. Decide what it might take to reach the goal and if that is a realistic proposition to aim for. Once you have that idea, make sure it will improve your situation.

T – Time Related

Goals need a deadline in order to be effective. When you set your investing goals, they need to be within a time-frame. The time horizon which you choose needs to be right for you and needs to be right for the goal you set. Investments take time to grow, so it is appropriate you consider the type of goal you wish to set.

Having that time frame provides you with motivation to help you prioritise. Also, it can help you establish benchmarks within your goals, and can be used to adjust your strategy if you are not on track. You need to set investment goals which have a realistic and achievable time-frame in order to maximise the possibility of success from your aims.

Setting your Investment goals

Essentially, SMART goals take your vision and turn them into a purpose for your investing journey. They consider the factors impacting them and make them right for you. They enable you to think of a specific objective, one which you can measure your progress against. It helps you create a realistic and attainable goal all of which can be achieved within a time horizon that works for you. Once you have begun to consider your aims, and the factors which may affect them, you can create SMART goals. When you set your goals, ask yourself:

  • Are they specific?
  • Are they measurable?
  • Are they attainable?
  • Are they realistic?
  • Are they time related?

These factors will allow you to set SMART investment goals which can be used as you invest. Once you have your goals, you can begin to apply them to your investments. You can use them to consider your strategy, your decisions and how you will be investing. Your goals will give you that purpose to achieve the aims and ambitions you have on your investing journey.

Leave a Comment

Your email address will not be published. Required fields are marked *