Invest with a Goal in Mind

Published On: September 6, 2024

Written by: Ben Atwater and Matt Malick

Goal-based financial planning focuses on setting specific goals and creating a plan to achieve them. For the majority of our clients, the most pressing goal is preparing for retirement.

Goal-based financial planning helps individuals stay focused and motivated. By setting specific financial goals you clearly define what you want to achieve and create a roadmap to get there. This keeps you focused and motivated to make the tough financial decisions necessary to reach your goals.

By setting measurable goals, you can track your progress over time and adjust your financial plan as needed, perhaps by avoiding unnecessary spending, investing more aggressively or saving more.

Furthermore, goal-based financial planning can give you additional peace of mind and keep you from distractions.

Worrying about your own goals is antiseptic to the noise you see on social media, television or what you read in the financial press. This helps reduce financial anxiety and makes you feel more confident in your ability to achieve your financial goals.

Goal-setting works in general, not just in a financial context. The five main reasons for goal-setting are:

• Focus helps you home in your time and energy on what you want to achieve.
• Motivation keeps you moving forward.
• Accountability helps you and us stay answerable and informed of what’s expected.
• Progress is something you can measure and continually reevaluate whether you are keeping pace.
• Direction helps you visualize your ideal future and stay on the right path.

From a financial planning perspective, implementing goals takes:

Lifetime Plans – This is a big-picture conversation about what kind of life you want to pursue. For example, your living standards, your retirement date, your vision for family support and charitable giving, your inheritance goals, etc.

Set Financial Targets – Turn those plans into financial projections. This includes what you plan to spend, what cash inflows you expect, sources of income, how you will invest, and much more.

Establish Deadlines – Deadlines are vital. When do you want to retire, when do you want to make that one-time special purchase, when are you thinking about collecting Social Security, and on down the line. Moreover, deadlines will inform your investment strategy, as well as many other aspects of your financial plan.

Create an Investment Plan – Your goals should dictate your investment plan. Way too often, people let the tail wag the dog and they make investments based on excitement or unreasonable expectations, often ending in tragedy. You should be investing to meet your goals, not just to “make money.”

Complete a “Draft” Financial Plan – We use the term “draft” here because your financial plan is always a work in process. Circumstances constantly change and we will always be adapting.

Work Long-Term – Your life will change over time, so it’s important that your plan evolves. Your goals will change. Your circumstances will change. And most of these changes will be unpredictable.

As financial planners and investment managers, we aim to align your goals with your investments. In other words, as it concerns your financial plan, we always strive to ensure that your goals drive your investment strategy.