Do This FIRST Before You Start Investing
You’re thinking about investing—kind of. You know it’s something you “should” do, and it feels like the next step in leveling up your financial game.
Here’s the big surprise: investing isn’t the first thing you should focus on. Before you even think about investing, you need to answer one key question: What are you investing for?
Most people assume that investing starts with picking the right stocks or finding a robo-advisor. But if you don’t know why you’re investing, it’s all too easy to start chasing returns without any real plan—just hoping for the best and following what your friends are doing. Here’s the reality: their investments likely have nothing to do with what you should be doing. Instead, start by defining goals that are unique to you.
Why Defining Your Goals Changes Everything
Before you jump into the market, take a moment and really think about what you want your money to achieve. Are you looking to fund big life goals, like buying a home, traveling more, upgrading your lifestyle, or saving for a future family? Do you want to retire early, or maybe just build up a financial cushion to give you peace of mind? This is where your real investing journey begins.
Investing without goals is like setting off on a road trip with no destination in mind. You’re wandering aimlessly, burning time and fuel, and hoping luck will lead you somewhere worthwhile. But when you have a clear goal, it’s like mapping out your route—you’re not just driving; you’re headed somewhere meaningful with a plan to get there.
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How Goal-Based Investing Works
Let’s break it down with an example: you want to buy a home. Maybe you’ve thought about what this could look like, but take it a step further. Get on Zillow, see what homes are going for in your area, and decide what feels realistic to you. At first, maybe you think you’ll need $500,000. But once you browse the market, you might realize that to get what you really want, you’ll need closer to $1 million. That’s the moment where you can start reverse-engineering a plan to make it happen.
Goals-based investing means defining:
What you want to achieve (like buying a home or traveling).
When you want to achieve it (say, within 5 years).
How much you’ll need to hit that goal (like that $1 million home).
With this information, you’re set up to choose an investment strategy that aligns with your real goals—not just with the ups and downs of the stock market. Investing is no longer about stock tips or trying to beat the market. It’s about making sure you accomplish the goals you set for yourself.
Why Context Matters in Your Investment Plan
Without goals, investing is just a guessing game. And traditional advice often misses this key point. Sure, you can throw money into an S&P 500 index fund, but if you’re going to need that money in the near future (say, to buy that house or fund a big life event), you’ll want an investment plan that matches that specific timeframe.
I believe it’s essential to build purpose into every dollar you invest. The more you define the “why” and “when” behind each goal, the easier it becomes to stay on track, make smart decisions, and actually feel excited about your investing journey.
The Bottom Line
Investing is great, but it’s not the starting point. Before putting a single dollar into the market, define your goals and get clear on why you’re investing. Investing without goals is just a game of chance; investing with goals is how you build the future you want.
Key Takeaways
Define Your Goals First: Investing is only effective when it’s tied to specific, personal goals. Know what you’re saving for before you start.
Timing Matters: A goal for next year looks different from one 20 years away. Define when you want to achieve each goal so your investment strategy can match.
Estimate Your Needs: Do some research to figure out how much you’ll need to reach your goals. A down payment in New York? That’s a very different plan than a dream vacation fund.
Skip the “Hot Tips”: Investment advice from friends or the internet won’t help if it doesn’t align with your goals. Your strategy should be as unique as your goals.
Purpose-Driven Investing Works: Investing without purpose is just gambling. When your money has a mission, you’re way more likely to stay committed and reach your financial goals.
The F. Word
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