Investment Goal

One of the keys to successful investing is identifying your investment goals, and the time frame over which you will invest.

Investing for a specific goal

When investing money, many people have a specific goal in mind. If this is the case for you, you need to decide what time frame is attached to that goal - short term, medium term or long term?

Examples of investment goals are:

Short term (1-3 years)	- overseas holiday - car - taking time off work to care for a baby
Medium term (3-7 years)	- deposit on a house - boat - a sabbatical or extended break from work.
Long term (7+ years)	- childrens' education - holiday house - retirement/early retirement

Investing a specific amount

Rather than having a particular investment goal, some people may just be wanting to invest a certain sum of money eg. an inheritance. If you are in this situation, you need to decide what you want from that money.

Do you want to use the money in the next year or two? (in which case you are a short term investor). Or do you want a regular income? (you will need medium term income-producing investments). Or do you want it to achieve capital growth over a long period of time, and are willing to take a long term view?

Time Frame

The time frame of your goals will determine how the money should be invested.

A short term investor would be more likely to choose a more conservative investment like cash, to ensure that their capital is available in the next 1-3 years when they need to access it.

A long term investor would be more willing to invest in 'growth assets' such as shares, as they do not need to access their capital for at least 5 years, so are less concerned about short term ups and downs. They recognise that the potential returns are much higher in growth investments, and if they are held over the long term the risk is reduced.

A financial adviser can assist you to understand the types of investment most suitable for your goals.