Know the terrain — Dissecting investment goals

The key identifiers of great investment goals. Understand them well to tread on the right path.

Keep your head down, and work towards your goals (img src)

WHY SETTING INVESTMENT GOALS IS IMPORTANT?

WHAT MAKES AN INVESTMENT GOAL “GOOD OR BAD”?

Therefore, your investment goals should have the following three traits:

#1. They should be measurable

Saving Rs. 10,000 per month towards downpayment of a home purchase (in 5 years).

#2. They should be reasonable and rational

Saving Rs. 25 lacs in 3 years for downpayment on the new house

AND

Saving Rs. 10,000 per month towards downpayment of a home purchase (in 5 years)

#3. They should be aligned with your broader objectives in life

THE SHORT AND CRISPY VERSION

Always have goals - be it in life, or your investments. Goals help you stay focussed, give your investments a sense of purpose, keeps things aligned. Having goals would also mean that you won't be flying blind anymore. Instead, you would be aware of the direction you need to take, and also be able to evaluate if you need to do some correction in your course at any stage. Without goals, you would be like a ship lost at sea.
There are three basic things you need to keep in mind while making investment goals:#1. Your goals should be concrete, crisp and clear. In one word, measurable.#2. They should be reasonable and rational. Just because you make your goal to be like Hercules and move mountains, won't make it so. So, be reasonable in setting your goals.#3. They should be aligned to your broader objectives in life. If one of the things you want to do in life is to complete the Ironman Triathlon, one of your goals in near future would be to start getting fitter, more athletic, with more stamina. Start aligning your short term goals with your long term ones.

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