When you’re investing your money, the questions you ask can make a big difference.
As lifestyle financial planners, we encourage clients to delve deep. As well as considering questions like “how should I invest for the greatest returns?” or “how safe is my money going to be?”, we seek to find out more about your long-term purpose.
So, in our first meetings with clients, we’ll always ask searching questions to understand more about your financial goals and long-term aspirations.
Ultimately, every investor is wise to start by answering a single question: “what’s the money you’re investing for?”
Knowing the answer to this question can help to define your investing purpose and provide a solid start to your financial planning journey.
The problem of investing without a goal
Investing with no clear goal in mind can leave you floundering, and liable to make poor decisions.
Imagine what might befall you if you packed up the car for a fun road trip without a set destination in mind. You head off in a random direction and see what happens.
You may get lucky and see some interesting views and even find a good spot for lunch. But you also run the risk that you may easily end up feeling frazzled, and realise too late that you need somewhere to stay. You’ll probably waste more time, money, and energy than if you’d set out with a firm idea of where you were heading.
The same is true of your investment journey.
Knowing you have a clear goal, and being able to keep sight of this along the way, can prevent you from making potentially costly mistakes.
Instead of being distracted by passing trends, or scary headlines shouting about imminent market disasters, you can keep a cool head and your eyes on the horizon, knowing that you’re still heading where you intend.
If you’re saving for your retirement that’s still a way down the line, there’s little need to concern yourself with short-term market fluctuations. Market dips and falls happening today, tomorrow, or next year will make little difference to returns over the coming 10, 15, or 20 years.
Ultimately, understanding your own time horizon could allow you a degree of calm because you know there is plenty of time for your investments to grow.
On the other hand, if you’ve invested for a known expense that’s coming up in the next 12 months, investing with a long-term growth strategy will likely leave you anxious and, possibly, out of pocket.
All this to say that if you fail to plan, you plan to fail.
So, before you invest, take the time to understand your goals. This should enable you to invest with a long-term mindset and avoid the potentially harmful effects of second-guessing yourself.
Use your “why” to guide your investment portfolio
Before investing your wealth, start by understanding your goals.
Begin by asking “what’s the money for?”. Then, keep your answer front of mind as you build your financial plan and devise your investment portfolio.
Your “why” will also help you to predict how many years you have to reach your ultimate goal.
Taking a goal-oriented approach from the beginning helps you to:
- Map out a clear investment strategy
- Keep calm when stock markets are volatile
- Ride out any temporary market downturns
- Remain confident that your investments are aligned to your long-term goals.
Your Ascenta financial planner is here to guide and support you
Our relationship is with you, not your money. We want to know what matters to you, what drives you, and what lifestyle you want to enjoy in the future.
Since successful investing begins with understanding your “why”, we’ll spend time getting to know you. We want to know what drives you, what concerns you have, and your hopes and dreams for the future.
Once we have a clear idea of your goals, we’ll translate that into a personal financial plan and investment strategy designed to help you achieve them.
With an investment portfolio specifically tailored to your goals, you can focus on what matters to you today, knowing that tomorrow is looking after itself.
And we’ll check in with you on a regular basis to ensure you remain on the best path, even if your circumstances change.
