The importance of short and long-term investment goals
Both new and experienced investors are aware of the importance of setting goals to achieve success, especially so for long-term goals. Investments involve taking risk, and it’s no secret that having firmly established goals is key to keeping on track and shaping investment strategies.
Despite the importance of setting long-term and broader goals, short-term goals are just as important- they are mutually inclusive. Let’s take a close look at why long-term goals are so crucial to investing.
“Definitions of any kind are often subjective,” according to Jamie Johnson, CEO of FJP Investment. “It’s the same with defining what is meant by long-term goals. However, what can be said for sure is that they are significant milestones that are made up of smaller steppingstones along the way. Furthermore, long-term goals require more forward thinking and strategies to achieve them. ”
Age and experience will play a role in defining your long-term goals. It goes without saying that a common objective of many investors is security in retirement, so the earlier you start, the longer you can plan and actualise your goals. Investing in property is a preferred way for many people to achieve financial security for the larger goal of a comfortable retirement.
In contrast to this, short-term goals are usually ones that can be achieved within a few years or so like clearing small debts, or that family trip to Disney World, Florida. Remain flexible with goal setting as things can and do change.
Regular investment and saving goals
More and more people are thinking about their saving and investing strategies these days, and they are starting younger, too. We are living in precarious times, and the pandemic has emphasised the uncertainty many feel. Youth, especially, are looking to the future with long-term goals on their minds.
One impetus for this accelerating long-term investing interest for “Generation Z” is due to poor returns on bank savings accounts, let alone the unenviable prospect of possibly facing negative rates in the future.
Those over the age of forty are less likely to engage in long-term investing, instead opting to save at least 12% of their earnings, indicating that this age group is still giving serious thought to their retirement. There is ample evidence that demonstrates people in many countries think and plan for a comfortable retirement, while at the same time, short-term goals, such as a large purchase, are much less important to their investment plans.
Increasingly so due to the rising cost of living and greater uncertainty, retirement planning has long been a primary investment and saving goal for countless people around the world. Added to this, the rising age of retirement, it’s easy to see why many more of the younger generation are giving more thought into planning for their futures by investing wisely.
Long-term investment goals
It is reasonable that investors may not consider their long-term goals in the earliest stages, so why is it advantageous to start an investment path with one in mind?
Clarity of focus
Being clear about exactly what you’re investing in and why may often simplify the process significantly, particularly when it comes to Buy-to-Let property. You will, say, be able to estimate how many years your mortgage should last if you know how much you need to save, and by when.
It also helps to choose which sort of property will help you achieve your objective. First and foremost, setting defined goals from the beginning offers you something to strive towards and provides your investment with a sense of direction
Save amounts that are manageable
You can split your target by the number of years it will take you to accomplish an investment with a defined long-term objective, and you will be able to save a set sum every month. By saving a modest amount gradually, you will be less likely to be impacted by the procedure and yet have more revenue.
So, you can cover unexpected repair costs or whatever else needs to be done in the apartment, it would be a good idea to put away some of your monthly rental revenue. You’ll still have enough left over to put in savings for the future.
A Motivating Source
Saving and investing without a clear goal may become tedious. A long-term objective can keep you energised to continue investing, as opposed to having no reason to invest. Having a long-term objective in mind and watching your investments get closer to it will definitely inspire you to continue, or perhaps increase, your investments
The final destination should be clearly defined, whilst recognising that each long journey consists of smaller ones along the way. It’s important not to lose sight of goals in the short term and to use them to accomplish long-term goals. There are frequently minor and short-term milestones within a long-term objective that might stimulate and push you further on your road to investing.
It’s worth noting, however, that if your short-term goals are at odds with your overall larger goals, consider adapting them to be better in alignment with your greater vision. This will help prevent you from getting off-track of those all-important investment goals you have set for yourself. Keeping your objectives reasonable and attainable, whether short-term or long-term, is vital. Taking on more than you can reasonably do in one go, and then failing to achieve it, may dishearten you and place doubts in your mind for the future. There is nothing more energising and inspiring than achieving goals, no matter how small or big they are.
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