Taking Stock of Your Annual Investment Goals

Investments Team / 27 May, 2018 / Blogs

Personal wealth management involves individuals going about budgeting, spending and saving monetary resources over time. Creating a financial plan helps you set long and short-term goals, a crucial step in becoming financially stable. A critical stage in the journey of personal wealth management is the review of the goals set over a given period. As an investor, you are more inclined to make yearly investment goals as this makes it easier to evaluate and gauge performance from a short-term perspective as well as the transition towards your long-term investment performance. To evaluate your yearly investment goals, we discuss some important questions to guide you in evaluating your goals, and steps you can take moving into the next year to ensure a successful investment.

Have I achieved my investments goals?

This is the starting point to gauging your position at the end of the year. To know your position, you should have a list of objectives set at the beginning of the year, against the results of the set objectives. You could have attained all the set objectives, some objectives, or none of the objectives, and as defined by the return attained against the expected return, you can assess the level of success attained. In most scenarios, it will be difficult to attain all the set investment goals due to changing economic and structural changes, and thus attaining most of your investment goals will be as good as having succeeded for the year. Some objectives are a priority over others and thus their achievement could indicate your level of success. Focus on the priority goals you did not achieve this year come next year.

Have my investment goals changed during the course of the year?

Many times an investor finds that their circumstances have changed during the period of their investment, and thus, they now need to take into consideration how this will affect their investment objectives. Adjustments to the already set goals might be required, and it is of essence to review whether the targets you had set have shifted by the end of the year. When your investment goals change during the year, it warrants that you create a new plan for managing your wealth. The ultimate goal of any investor is a return on their investment and your circumstances and situation dictate what amount of risk you can take on as an investor. Thus, improvement in your ability to bear risk may warrant you seek higher returns than you are currently getting and thus the need for investment opportunities that will give back the required return, while a deterioration in your ability to bear risk may warrant you to seek a safer investment that may not offer a high return.

Have my life goals changed?

Your life goals will influence your investment goals in a big way. Life goals change over time and to make them achievable, you have to align your investment goals with your life goals. Despite having achieved your goals in the current year, moving into the next year you have to review your current situation and assess key determinants such as family, health status, and education needs. These are key determinants in financial planning and it is advisable to evaluate whether there is a significant shift in the needs and circumstances that shape your investment goals. Needs such as monthly savings and liquidity could change, for instance, if you have to pay school fees for your child that you were not doing before or if you decide to further your education. For the best payoff ensure your investment goals are aligned with your life goals.

Are my investment goals good enough?

Good investment goals are those that maximize your returns and provide you with the best financial stability. Going by your risk tolerance level, that is, your capacity to take on risk and not just your willingness to bear the risk, it is crucial to ensure you are matching your investment avenues with your risk for possible maximum returns. High risk equals high returns, a common phrase among investors, but remember risk is the probability 2 that an investment may not earn its expected rate of return. It is of paramount importance to gauge whether your risk tolerance level has changed and if it has improved, how you use this to your advantage.

What should I adjust going into the next year?

Having or not having achieved your goals could warrant adjustments to your investment goals come the next year. To better your investment goals, you can adjust the objectives already set in the previous year or set new goals that will propel you closer to your life goals and better your life. Asking what went wrong or how to improve, is a great start to seeking a starting point in adjusting towards better investment goals.

In conclusion, a review of your investment goals is an important element of your wealth management plan as it defines the steps you are taking towards personal financial security. A yearly review using the questions above as a guideline to review your investment goals will set you on a path to better your investment goals and guarantee financial security. Only goals reviewed can be improved; so make the review of your goals a regular habit.

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