As we go through life, a lot of things change . This can be occasioned by changes in our family status, financial position, stage in career, spiritual orientation among others. Given that finances play a central point in every facet of our lives, it is therefore important to ensure that we are changing our investments and investment goals with the changes that happen in our lives. There are some broad guidelines that determine what type of investment one needs to undertake at a  particular point in their life and among them are:

1. The Investment Horizon

Depending on what the time period is for a specific objective to be attained, one can decide what type of investment to undertake. If one is saving for a wedding that is just around the corner the time horizon is short and they can not take chances with the cash and so they should invest in low-risk investments like fixed deposits and money market funds. If the goals are for let’s say our kid’s university education, and the kid has just been born then the investment can be done in higher return, higher risks investments like stocks and real estate.

2. Financial Literacy Levels

It is advisable that we  invest in that which we do not understand well, for instance, in cryptocurrencies, many people have invested in them and made money but at the same time, a lot of people have lost a lot of money. Given the importance of the goal that you are investing for, it is very important that you do not take a gamble with your cash and just ensure that you spend time understanding the investments and the risks that comes with them.

3. The Investment Amount

There are some investments choices that one cannot undertake since they are out of reach from their available resources. When one is selecting their investments, they should ensure that they are within reach to avoid disappointments and desperation. For example, if one was saving for a home and they are fixated about owning a home in a certain neighbourhood and they are not able to afford the place they might end up giving up on homeownership yet there could be many other worthy places to live in.

4. Return Expectations

For the same level of risk, one should ensure that they are investing in the asset or security with the highest possible return. Let’s say, for example, you are investing in the stock market, given the market dynamics are largely the same, it is therefore important that one takes time to dig through the numbers and invest in the stocks whose company potential is good and is projected to do well in the long term.

5. Investment Risk

Understanding which risk and how much risk each investment carries is important so that as you make the choice of investments you are completely aligned. Let’s take for example in real estate the largest risk could be title risk and that could be sorted out by ensuring you have done sufficient due diligence. There is however a larger risk of illiquidity meaning that you are not going to be able to change your investment into cash at will. It is therefore good.

6. Taxation Status

Tax is one of the largest expenses that individuals and businesses have to pay. The taxation varies from individual to individual and from product to product. It is therefore important to ensure that we undertake proper tax planning as we undertake our investments to ensure that we are placing our funds in portfolios with tax advantages. If for example, we want to invest in government securities it makes sense to invest in Infrastructure bonds because the return is amplified by the fact that they are tax exempt.

The goal-setting process is interactive and below are some of the key steps to setting the key goals:

1. Identify and write down the key goals. Once you write down the goals, it usually helps you get clarity as you question yourself on not only what you need to achieve but also on how this is to be achieved.
2. Ensure the goals are SMARTER i.e They are Specific, Measurable, Attainable, Realistic, Time-bound, and that you can Evaluate and Revisit them. If your goals are not Smarter it means that they could either lead to a different direction or takes forever to achieve.
3. Come up with an action plan. The plan should be simple and flexible to ensure that it can easily be changed to adapt to any new reality.  
4. Execute the plan. Execution is everything!
5. Review and evaluate since things change and therefore it is always good to stop and relook at where you are versus where you are going and see how far from the goal you could be and take any corrective actions if required.
   

Goal setting and investing go hand in hand and we should ensure that we create a clear feedback loop to ensure we are evaluating both our investments performance, potential future performance and ensure this is still taking you in the right direction. This process though looks simple and straight forward but might need you to speak to professional financial advisors to ensure you get it all right.