How To Set Your Investment Goals?

by: Khen Elazar

Investing can be a very different experience for different types of investors.

Investors are very different from each other based on many aspects such as age, income, saving rate, and needs.

Setting your goals is a crucial part in becoming a successful investor.


Goals are one of the most important aspects in investing. The markets are very complex. They offer all kinds of financial instruments that connect investors with companies. It allows investors to transfer their money to the future while gaining positive returns. Different investors have different needs, and therefore, their investment goals will be quite different.

Setting your goals for investing requires some thorough thinking. An investor must think of himself today, and he also must think of himself in the future. His goal is to be the future self that he wishes to become, and he will have to choose the right strategy to help him achieve his goals.

Setting a goal isn't a simple procedure as well. A good goal can be measured and achievable. The goal must be clear and understandable. For example, invest $5,000 in a healthcare ETF such as Health Care Select Sector SPDR ETF (XLV). A bad goal, for example, will be to achieve financial independence, as it is unmeasurable.

The goals should also be achievable. While it should be achievable, it shouldn't be too hard to achieve. It should be challenging yet doable, it should encourage you to devise a good strategy to achieve it. A good list of goals will contain a wide array of goals, which are challenging yet doable and measurable.

What to take into account

When you start setting your goals, you should first look at your personal information. The current personal information will have an impact on what you can achieve in the coming year and what you can achieve in the long term. Your age, marital status, and income are all crucial when you set your goals.

Another important aspect when setting investment goals is the investment horizon. When will you need your money? If you need it next year because you save for down payment on a house, you will have one kind of goals, strategy, and portfolio. If you need it in 20 years for your retirement, you will set other goals and use different strategy. The investment horizon is a crucial element.

Some goals require time, not just time in the market, but your own free time. For example, looking for a better paying job, allocating time to side hustle that will increase your income or reading books about investing all require time. Therefore, you should know how much time you can spare when you set your goals.

Setting financial goals

At this point you know how much time you must spare, you took into account your personal information and your investment horizon. It's time to start setting your financial goals. Try sticking to goals you can control. For example, a total return goal has lot to do with the markets, and not with you. On the other hand, allocating a certain amount of money into your brokerage account is a controllable goal.

Use actual numbers when setting your goals. Maximizing my saving rate or saving as much as I can are very bad goals. They can't be measured, and they are just too vague. Use numbers to turn vague goals into specific goals. Save 20% of my annual income and transfer $15,000 to my brokerage account are specific and measurable goals that can be followed throughout the year.

When you set financial goals, take into account that failing is a possibility, set difficult goals but not too hard. The reason I use measurable and specific goals is because even if I fail, I can gain insights. Let's assume you want to invest $15,000 annually. At the end of the year, it's quite different if you saved $14,300 or you save $7,000. Each failure will give different insights, and understanding our failures is a crucial part in improving as investors. Don't be afraid of failing. Big corporations run by successful people also miss their goals sometimes, it's the long-term vision that matters.

Set goals in a way you can monitor them along the year. Goals should be monitored constantly, at least quarterly and preferably monthly. If your goal is to invest a certain amount of money, you don't want to be surprised by the end of the year. Monitoring them allows you to make more effort into areas where you lag or prioritize your goals if you realize you can't reach them all.

Adding non-financial goals

Money is only a means to an end for most of us. We aren't a corporation where the vague goal is to maximize profits. As human beings, we have more goals that fill our lives. From education to family and hobbies, a healthy list of goals should combine financial goals with non-financial goals. At the end of the day, our financial goal will support our non-financial goals.

Make sure that your non-financial goals can live with the financial goals in harmony. If one of your financial goals is to save 50% of your income, and you also set a non-financial goal of traveling abroad twice, it will be very challenging unless your income is very high. Try to choose goals that will support each other. For example, education can support your investment skills and your financial goals in the process.

Your non-financial goals should be measurable as well. You want to lose weight? Set a weight goal. You want to read more? Set how many books you want to read throughout the year. The use of measurable goals will allow you to monitor your progress and will also let you see how well you did by year end.

At this point, you have list of financial goals and non-financial goals for the coming year. This list should be supporting your long-term vision for yourself. The list will probably include how much you want to invest, where will you allocate the funds to, together with personal non-financial goals.

Goals require strategy

So, you have your list of goals, but how do you achieve them. There are several ways to achieve most goals. Each way is a strategy, and an investor should choose a strategy that fits him the best. If we try to use the corporation metaphor, the goal is to reach a certain EPS figure, but it can be achieved by several strategies: cost cutting, new products, acquisitions, and more.

Make sure that your strategy makes sense and works well for all your goals. For example, don't choose a cost-cutting strategy to increase your saving rate if you know that your spouse will disagree or that you don't have the ability to trim costs significantly now.

At the end of the year when you check if you reached your goals, try to understand if you failed goals because you were too ambitious or you tried the wrong strategy. If you were too ambitious, consider amending the goal, and if your strategy failed you, consider choosing a different strategy next year.


Goals are crucial for investing. Every financial company sets them, and so should you. Understand your current position in life, think what you want to achieve in the future, and make a list of financial and non-financial goals. Then choose strategies that will help you achieve these goals and start working on it.

Examples for financial goals: reach a 30% saving rate, earn $10,0000 in passive income, invest $5,000 in Financial Select Sector SPDR ETF (XLF), initiate a new position in three of these five IT companies Apple (AAPL), Microsoft (MSFT), Google (GOOG) (NASDAQ:GOOGL), Facebook (FB), and Amazon (AMZN), get a pay raise of $100,000 at work. All goals are specific and measurable.

Examples for non-financial goals: travel to Costa Rica, read six books, lose 10 pounds, start playing the violin once a week. Try to fulfill your goals using a strategy that fits you and make sure you measure them frequently. At the end of the year, look at the goals you set and where you are right now. Hope you all set challenging goals for 2019, and I hope you will reach them.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.