Go for Goals: Why You Should Set Business and Investment Goals

He was the greatest — and even he said so himself. Mohammad Ali achieved much within and outside the boxing ring. He said, “what keeps me going is goals.”

Are you working on your investments this year, trying to grow your nest egg or retirement fund? Here’s why you need investment goals.

What Makes a Good Goal?

Whatever the context for goal setting there’s a useful guide for effective goal setting. Tried and tested rules that will make your goals more likely to be achieved. Follow them or prepare to fail.

Forbes contributor, Pia Silva recommends that you write your goals down. Without a clear written down plan, you’re likely to be one of the 92% of people who set goals and then fail to achieve them. It’s just too easy to be distracted, lose enthusiasm, and crash and burn.

Write your goals down and be specific about what you want to achieve. A general intention just doesn’t do it.

Lose weight” is a classic unspecific goal. It leaves out crucial information about how much, by when, and at what rate.

If you amputated a limb would that count as goal achievement? Include specifics about your goals including how they will be measured and deadlines for achievement.

A further good goal setting approach is to be realistic. Your goals have to be achievable.

This doesn’t mean they can’t be stretching or demanding. But have a reality check before you set yourself up for disappointment.

Where Are You Now?

Whatever your investment goals — they should take account of your current position. Your current position includes not only your financial resources but your other resources too. Resources can be defined very broadly.

Your knowledge, skills and experience count as a resource. If you have investment skills, you may set very different investment goals than if you’re very low on the learning curve. A track record of business or investment achievements might indicate likely success in the future.

Consider the common error made by gambling addicts. They may start with a stake and a goal to win a certain amount. They lose some money and then adjust their goal to win back what they’ve lost and still achieve the original goal.

This approach inevitably leads to greater risk-taking and possibly greater losses. This becomes a spiraling descent into debt, broken lives, and personal tragedy.

Equally, underestimating and failing to utilize your non-financial resources is also poor goal setting. Can you leverage your relationships, other assets, and personality to help achieve your goals? Perhaps you underestimate your potential.  

What’s Your Horizon?

What timeline are you considering? Do you have short, medium, and long-term goals? Business and investment goals often focus on the big picture but you need a shorter time frame too.

If you have a long-term goal such as financial independence by a certain age, how will you know you’re making the right progress? Without checkpoints along the way, you could find that you don’t achieve your goal too late to do anything about it.

Set some shorter-term goals and check progress from time to time.

Understand Investments Can Go Down

Any serious investor recognizes that you don’t always do well. Investments do sometimes fail. If you know this, you can prepare.

Preparation for the possibility of failures means moderating your goals so that you don’t assume maximum returns all the time. Make modest assumptions about returns and you won’t be disappointed. You might even be pleasantly surprised.

What’s Your Attitude to Risk?

Are you a high-risk taker? Do you hurl yourself down the ski slope risking life and limb so you can experience a high adrenalin thrill? Are you happy to risk everything in the hope that you’ll win big in your investments?

Are you a low-risk taker? Do you still listen to the flight safety announcement even though you’ve heard it many times before? Do you worry that you’ll regret staking your hard-earned money on investments that may bomb?

Your attitude to risk is probably somewhere between these extreme positions. Make your goals reflect your attitude to risk.

If you’re more risk-averse, set more modest but achievable goals. This means you can choose less risky investments and still hit your goals. Spread your investments to mitigate the risk and have more frequent goal review points.

If you’re more risk-taking, have more stretching goals and longer time horizons. Your investments may be more volatile but your longer-term focus will mean you don’t realize the losses. You’ll give investment longer to be successful.

It’s Not All About the Money

Business and investment goals tend to focus on the numbers. That’s important if you want to have specific and measurable goals. But numbers are not all you should think about.

What else is important to you? Your goals should reflect the whole picture. Think about financial objectives examples that aren’t about numbers.

You may be interested in passing a family business on to the next generation. This legacy is not only about the investment returns but about something broader. You should incorporate this into your goals too.

Are you comfortable with any kind of investment opportunity? You may wish to avoid investments in areas you regard as unethical. If you have concerns about certain kinds of investments matching your ethics you may include this in your goals.

Now You Have Investment Goals, Make a Plan

When you have a clear idea about where you’re starting from and where you intend to end up there is still one thing missing. How do you get there?

You need a plan to achieve your investment goals. This plan should set out what you will do to achieve it and how you will do it. It should set out the resources you intend to bring to bear and how and when you will track progress.

Here are some ideas for getting started

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