Why your investment goals should be flexible

Finding out an investor's goals is a key part of the financial planning process, but what happens when people change their minds?

Steve Wendel 15 February, 2019 | 6:00PM

One of the first questions a financial adviser asks a client is: what are your goals? Without an end in mind, a lot of saving, investment and retirement decisions can lack focus. And without a concrete target, it's hard to assess whether an investor has succeeded or not.

Typical goals range from the broad, such as "achieve financial independence" to the specific, "pay for my child's education".

Goals-based investing relies on a simple and powerful premise: identify what the investor truly seeks to accomplish and then use that knowledge to generate an appropriate portfolio and improve the investor’s peace of mind. In fact, there’s good reason to believe that focusing on an investor’s goals can both increase total returns and help motivate the investor for the long haul.

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About Author

Steve Wendel

Steve Wendel  Steve Wendel is head of behavioral science for Morningstar, where he leads a team of behavioral scientists and practitioners who conduct original research to help people invest and manage their money more effectively.

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