Know where you’re heading with clear investment goals

CommSec CommSec

3 August 2018


Setting goals is one of the first steps towards building your investment strategy.

Every investor wants to make money, but your personal goals will probably depend on things like your age, lifestyle, career, and how much risk you’re comfortable with.

An investor without goals is a bit like a car with no destination. You can start driving, but until you know where you’re going, you won’t know which way to steer.

It’s important to have goals because:

  • Setting goals will form the basis of your investment plan
  • It’s easier to choose investments and make investing decisions when you have goals
  • Having defined goals will help you know whether you’re on track or not

What does a good investment goal look like?

Investment goals should be clear and measurable. Ideally, try and put a number against your goal, and add timeframes so you can start to plan out your investment horizon. Write down your goals so you can plan and track them more easily.

Example goal


When I want to achieve it



1 year

New car


3 years

House deposit


6-8 years



20 years

Be realistic about your goals. They should be things that you could reasonably achieve without having a significant negative impact on your current lifestyle. One way to assess this is to break down a larger goal into smaller chunks. If you want to save $10,000 in a year, how much will you need to save or earn every week to get there?

Look at your short-term and long-term goals together to see whether they’re compatible. If your goal for retirement is overambitious, you might be sacrificing shorter-term goals (like education or renovating your house) for the sake of the long-term goal.

How are you going to reach your investment goal?

Investments can generate returns in two ways: growth and income. Your goals might impact what type of return you want to earn, which in turn can affect the type of investments you choose.

For example, if your goal is to buy investments that will provide an income for you in the near future, you might choose shares in companies that you believe are likely to pay higher dividends. But if your goal is to gradually build wealth over a longer investment horizon, you might look into stocks that have a lower dividend yield but a higher potential for growth.

When do you want to achieve your investment goal?

Timeframes are important because they’ll often determine how much risk you’re comfortable with. Even if a market is trending upwards over a long period, it’s probably going to go through short-term ups and downs.

So if you want to achieve your goal in the short term, you might prefer lower risk investments that provide lower returns but are generally more stable (and less likely to be affected by market fluctuations). For example, cash, bonds, or some types of ETFs.

If your goal is longer-term you might look into higher risk investments that provide the opportunity for higher returns. That way if the market falls, you can wait for a recovery rather than being forced to sell when prices are low.

How much can you afford to invest towards your goal?

When you’re setting investment goals, think about your budget and be realistic about how much you’re comfortable investing. Remember that investment returns aren’t guaranteed, and if your investing goals are long-term, you might need to leave money “locked away” in investments for a period of time. If you’re likely to need an amount of money in the near future, it might not be the best idea to invest that money right now (or you might choose asset classes with higher liquidity so it’ll be easier to sell them in a pinch).

Leave some wiggle room

Life happens. Nobody can plan for everything, and most of us will need to adjust our goals at some stage. So leave a little room for flexibility with your goals, and remember that you might need to adapt them in the future. Check in with yourself from time to time and ask yourself whether your goals are still guiding you in the right direction.


  • Your goals will form the basis of your investment strategy.
  • A goal might include the amount of money you want to accumulate and a timeframe (eg $15,000 in 3 years).
  • The goals you set will affect your risk tolerance and the types of investments you choose.
  • Write down your goals and reflect on them regularly.


Strategy & Education
View all insights

You may also be interested in..

Investing vs trading: which one’s right for you? Strategy & Education

Investing vs trading: which one’s right for you?

CommSec CommSec

18 April 2018

People often use the words “investing” and “trading” to mean the same thing, but when you get down to the nitty gritty, you’ll find that investing and trading are two distinct disciplines.

Read more

International trading Strategy & Education

Should you invest in international shares?

CommSec CommSec

17 May 2018

International investing is on the rise for Australian investors, thanks to booming overseas markets and big name stocks like Facebook and Amazon. Is it time to dip your toes into the global market?

Read more

Why borrow to invest? Strategy & Education

Why borrow to invest?

CommSec CommSec

21 May 2018

For many investors, it can take a long time to build a large, well-diversified portfolio. One of the ways investors can potentially grow their portfolio faster is by borrowing to invest.

Read more

Start trading today with Australia's leading online broker

Join now >

Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 ("CommSec") is a wholly owned, but non-guaranteed, subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 ("the Bank") and both entities are incorporated in Australia with limited liability.

This information is directed and available to and for the benefit of Australian residents only and is not a recommendation or forecast.

This information has been prepared without taking account of the objectives, needs, financial and taxation situation of any particular individual. For this reason, any individual should, before acting on the information on this site, consider the appropriateness of the information, having regards to their own objectives, needs, financial and taxation situation, and, if necessary, seek appropriate independent financial, foreign exchange and taxation advice. CommSec, and its related bodies corporate, do not accept any liability for any loss or damage arising out of the use of all or any part of this information. We believe that this information is correct as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness.



This site is directed and available to and for the benefit of Australian residents only. © Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 ("CommSec") is a wholly owned, but non guaranteed, subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and both entities are incorporated in Australia with limited liability.

By clicking on the "Download the CommSec App" buttons above, you will be directed to or These sites are not affiliated with CommSec and may offer a different Privacy Policy and level of security.