Personal and lifestyle targets help to shape how we live our lives. Where money and income are concerned, having goal-based investments helps to achieve our aims and realise dreams.
For many people, the idea of simply growing a pot of money isn’t enough. It’s not easy to visualise how that fund will satisfy specific future needs.
We all have different lifestyle and financial goals. What we want to achieve now, in ten years’ time and during retirement differs from person to person. In fact, the risks associated with achieving those goals also differ.
Ultimately, we’re all different. There can be no one-size-fits-all solution. However, what everyone wants is to be free to live an independent and comfortable life.
Why have financial goals?
People’s circumstances are always unique. They also change as the years go by. So, having specific financial goals lets you deal with the things that really matter to you.
You might want to build a fund that pays a consistent level of income during retirement, from a nominated date of your choice. It could be to save towards your children’s education. Both can be linked to a given year when milestones or birthdays are reached.
Other investors already have pensions in place and set different targets. They may wish to take regular holidays during retirement, with money made available each year.
Alternatively, some people might like to be in a position to leave some money for their children or grandchildren.
Crucially, people want to do what makes them happy, fulfilled and in control.
How does it work?
Goal-based investing (GBI) is a major shift in direction from how traditional investment advice was once given. It involves selecting investments to achieve specific goals.
Clients and the wealth manager measure the progress of investments based on what they want to achieve. More focused decisions are made depending on the time available and the risks involved.
This is achieved by placing people’s goals at the centre of the advice process. When goals are clearly identified, the best possible investment solutions can be identified.
The success of a goals-based strategy is not about short-term gains or out-performing other products. Instead, the investment is measured against a stated goal.
The process is more relevant to investors and what they need. This applies to the product selected, the ongoing communications and reporting of progress.
Benefits to a goal-based approach
Adopting a goal-based approach to investing involves the client from day one. That’s how it should be. You are in control. Your targets form the basis of all planning.
Breaking down your finances into clearly defined investments makes sense. We all do this with day-to-day expenses, with bank accounts for bills, savings and emergency funds.
These accounts form part of your overall wealth but work independently. They help you to manage monthly finances and allow you to move money if required.
Having diversified investments to meet different targets also makes sense. They will be growing at different rates to achieve a range of goals, as set by you and your adviser.
Crucially, goal-based investments help you to focus on the ultimate objectives. There is a measured approach to achieving what you identified at the beginning.
With no goal attached, you might be tempted to make hasty changes if markets dipped. Please be aware that the value of investments or income from them can fall as well as rise.
With a clear route planned to reach your goals, you enjoy greater peace of mind.
Need that chat about financial goals?
The Logic Wealth Planning approach to wealth and investments is about listening, understanding and instilling confidence. That’s vital so people can make important decisions that affect the rest of their lives.
The Logic Wealth Planning team will be delighted to point you in the right direction.
Just call 0808 1234 321 or email firstname.lastname@example.org and we’ll get that financial health check started.