1. Define Your Investment Goals & Objectives
  2. Define Your Investment Strategy for Your Portfolio
  3. Building Your Own Portfolio to Match Your Goals
  4. Monitoring and Rebalancing Your Portfolio
  5. The Bottom Line
  6. 401(k)s
  7. Exchange Traded Funds (ETFs)
  8. IRAs and Roth IRAs
  9. Mutual Funds
  10. 529 Plans
  11. Stocks
  12. Life Insurance
  13. Bonds
  14. Annuities
  15. Health Savings Accounts (HSAs)

“If you don’t know where you are going, you might wind up someplace else.” – Yogi Berra

If you build a house without a plan, what sort of results would you expect? Theoretically, you could get lucky and end up with the house of your dreams. What’s more likely, however, is that the house wouldn’t be anything like what you had wanted. You might need to move the doors and windows, build new walls and take down others – or worse.

Investing isn’t any different. Without a plan, you could (again, theoretically) get lucky, but the odds are against it. Without goals – and a well-thought-out plan for meeting those goals – you probably won’t end up where you want to be financially, in either the short- or long-term. You have to make goals to meet goals.

There are several ways to approach investment goals. Traditionally, investors have focused on generating the highest possible returns or beating the market, while staying within their comfort zones in terms of risk. A relatively new approach to wealth management is goal-based investing, which emphasizes investing with the objective of reaching specific life goals – such as buying a house, saving for your child’s education, or building a nest egg for retirement – instead of comparing returns to a benchmark. The theory is that:

  • Setting goals makes it more likely that you’ll save for – and achieve – every goal.
  • You’ll be more motivated to reach a goal since you can gauge its progress.
  • You can consider the time horizon and risk level separately for each goal, and invest accordingly.

Whichever approach you prefer, the important thing is to do something, and not just leave your financial health to chance. Many people work with financial advisors (FAs) – professionals who provide financial advice and guidance. They can lay out your options and help you find investments that match your risk level. In many cases, working with a financial advisor makes sense, but it is possible to be your own FA – if you’re willing to put in some time and effort.

Set Your Goals

The first step in successful investing should be to define measurable and attainable goals. It’s helpful to ask yourself, “Why do I want to invest?” There are lots of goals, so really think about what you are hoping to do financially. Are you investing to:

  • Build a nest egg for retirement?
  • Buy a vacation home?
  • Create an income stream during retirement?
  • Donate to charity?
  • Start a new business?
  • Leave a financial legacy to your family?
  • Pay for a wedding?
  • Save a down payment for a home?
  • Save for your children’s education?
  • Take a special vacation?
  • Do all of these?

Next, arrange your goals by the time horizon for achieving them:

Short-Term Goals

Mid-Term Goals

Long-Term Goals

Pay for a wedding

Buy a vacation home

Build a nest egg for retirement

Take a vacation

Have the funds to start a new business

Income stream for retirement

Save a down payment for a home

Leave a financial legacy to your family

Save for your children’s education

Rather than just doing all this in your head – write it down. Putting your goals on paper makes them more “real” and you’ll be more likely to think about them. Plus, you can share your goals with your spouse, family or friends – which can give you a little motivational push.

Decide How Much You’ll Need

The next step is to attach a dollar figure to each goal. With some goals, it’s easy to say how much you’ll need: for example, you plan on giving your daughter $5,000 (and no more!) to help pay for her wedding, or you want to save $10,000 for a trip to Antarctica. With other goals, it’s a bit trickier to nail down a specific amount, so you’ll have to spend some time crunching the numbers. There are lots of online calculators that can help – just search for the type of calculator you need, such as “retirement calculator” or “college savings calculator” to get started.

Once you have a list of goals and financial objectives for each, it’s easier to plan, budget and choose the right investments. In the next chapter, we’ll look at different retirement and tax-advantaged accounts you can use to meet your goals.


Define Your Investment Strategy for Your Portfolio
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Frequently Asked Questions
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