Investing: Start with an End in Mind

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If you plan to start investing, what do you want to achieve?

Many people invest for several reasons, but here are two of the most common answers – to make my money grow and make it work for me, and beat inflation.

There is nothing wrong with those, but your reason should be more than that in investing.

The keyword is “achieve.” What do you want to do with the money you will gain* after several years of investing? Because if your only goal is to accumulate money, you may be missing the point of investing in the first place.

The ( * ) is placed to emphasize that there is no guarantee in investing. We can only rely on historical performance.

Setting a Goal.

your investing must have a goal.
Photo by Anna Tarazevich on

Like many things in life, you need to have a goal – which is your dream with a deadline and, most often, with a price tag.

Setting a high goal should not scare you. What you should be afraid of is a wasted life wrapped in mediocrity. However, setting your expectations on your capabilities and life circumstances is crucial.

Most of us dream of having a good life, living in a beautiful house, driving a fancy car, giving children a good education, and traveling now and then. But as many as those who dream, it is almost as many who fail.

So before you start placing your hard-earned cash into any investment vehicle, you should first know where you’re going to use it when you will use it, and how much you need to accomplish your goal.

How to Set a Financial Goal?

Many of us are already familiar with the acronym SMART in goal-setting, which can also be used in investing. But for those who forgot, they are:

1. S — Specific — state what your EXACT goal is. (house/car/retirement)
2. M — Measurable — how much do you need?
3. A — Achievable — what steps do you need to take to achieve your goal?
4. R — Relevant — is it aligned with your other goals or current situation?
5. T — Time-bound — Most importantly, your investing goal should have a deadline. When do you wish to buy/achieve your financial plan?

Where do you invest?

Where you will invest will depend on your goal. For example, if you retire in five years, it wouldn’t be wise to invest in the stock market because of its volatility.

On the other hand, you can’t maximize your investment potential if you are 23 years old and saving in a time deposit for retirement.

Simply put, your investment goal should align with your time horizon.

Investments for Short-Term Goals

For short-term goals or less than one year – you should invest in low-risk, low-return products like bond funds, money market funds, and time deposits. This will preserve your investment capital.

You can also put your money in high-interest savings banks that will yield a consistent monthly income that will easily beat any traditional banks.

Investments for Medium-Term Goals

The best investment vehicle is the balanced fund for medium-term goals or one year to five years. Since it is a moderate risk, your capital will be invested in low-risk investments, like bonds and money market funds, mixed with high-risk instruments like stocks. You may even add a PAG-IBIG MP2 Investment.

Investments for Long-Term Goals

For long-term goals or more than five years. The best investment is in equity funds like the stock market. The time component will normalize the high risk. The longer you invest, the safer the stock market gets. (I think I will write a new post for that.)

Related: Invest in Mutual Funds For Only P50

Final Thought:

It is human nature to dream and dream big. But dreams will always be dreams unless we take action. Place a deadline and a price tag, and you have yourself a goal.

Investing is just a means to an end, just like money is a tool. Having more cash should never be your ultimate goal. It should be used to enjoy and experience our God-given time.

This post may not consider other circumstances, but I believe that if God puts you in your current situation, He will push through. We have to let Him.

Happy investing, and God bless.

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