Setting Your Investment Goals

Last updated: April 13, 2016

It Is Important to Set Goals Before You Invest

Whether you are a novice or an experienced investor, doing your homework is important. There are several questions to consider before setting your personal investment goals and objectives:

  1. What are my primary investment priorities?

  2. Am I interested in long-term growth, short term-gains, or current income?

  3. Do I plan to use investments for tax savings or as a primary source of income?

  4. How much risk am I willing to take? How much of my investment can I afford to lose?

Which Investment Objectives Are Right For You?

SAFETY (Low Risk):

  • This conservative approach involves low risk but often generates only a low to moderate return.

INCOME (Low to Moderate Risk):

  • These conservative investments are designed to generate regular payments or tax savings.

GROWTH (Moderate to High Risk):

  • This higher risk approach targets long-term growth. Short-term losses will occur and long-term losses may occur. Investors pursuing this objective over a long period of time, seek to balance the higher risk with the potential for significant growth in the value of their portfolio.

SPECULATION (High Risk):

  • These high risk investments may produce high profits and/or a quick return. However, losing your entire investment is a distinct possibility.

Let Your Personal Financial Situation Guide You:

  • If you have a good, steady income, or if you are young and willing to take more investment risks for larger gains, then it may be appropriate to include “growth", "aggressive growth" or even limited “speculative” investments in your portfolio.

  • If you are living on a fixed or retirement income, then “safety” investments that pay regular dividends and interest may be your priority.

  • A third alternative, recommended by many experts, is a diversified investment portfolio that includes a combination of low and moderate to high risk investments.

  • Be realistic in setting your investment goals, because no investment is entirely without risk.

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*The information on this page is credited to IPT and Kiplinger. Their original materials are made available on the Kansas Securities Commissioner's website.

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