“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” – Warren Buffett
Goals-based investing is a key strategy that often makes the difference between a successful investor and an investor that is unsuccessful. Investors who are clear on their investing-goals have the clarity, confidence and discipline to navigate the volatile, uncertain and complex world of investing.
1. Define your goals
- List down 5 goals that you want to achieve
- List when you want to achieve all those 5 goals
- List how much it would cost to achieve each of those 5 goals
Tip: We recommend not listing more than 5 as our experience tells us this leads to poor results. This is because listing more than 5 can give you the feeling of “this is too much, I can’t do it”.
Tip 2: Once you hit a goal, scratch it off, congratulate yourself and set a new one.
2. Allocate money (capital) to the right assets for each of your goals
Allocate money to invest in the right assets, consistent with your goals’ time frames. For your longer term goals (7+ years), you can afford to invest in assets that fluctuate more in price (meaning more volatility).
Meanwhile, if you have a goal that is short term (1 year or less), it is a good idea to have that money in cash or near-cash assets (such as term deposits).
3. Review
Life is full of change and your goals need to reflect what you want out of your life. So, when your priorities shift, your goals need to change as well. When this happens, go back to step 1 above.
