Identifying Your Investing Goals: A Comprehensive Guide
Identifying Your Investing Goals: A Comprehensive Guide

Identifying Your Investing Goals: A Comprehensive Guide

identifying goals

Investing is a journey, not a sprint. To navigate this journey successfully, it’s essential to have clear, well-defined goals. Mark Matson’s seminal book, Main Street Money, emphasizes the importance of setting realistic and achievable investing goals. This guide will help you identify your investing goals so that you can effectively communicate them with your investment advisor.

Why Setting Investing Goals is Crucial

Before diving into the steps to identify your goals, it’s important to understand why setting goals is so crucial. Investing without clear goals is like setting sail without a destination. Goals provide direction, help you measure progress, and keep you focused during market fluctuations.

Step 1: Understand Your Financial Situation

Begin by taking a comprehensive look at your current financial situation. Assess your income, expenses, debts, and assets. Understanding where you stand financially will help you set realistic and achievable goals.

Questions to Consider:
  • What is your current income and how stable is it?
  • What are your monthly expenses?
  • Do you have any outstanding debts?
  • What assets do you currently own?

Step 2: Define Your Time Horizon

Your time horizon is the length of time you expect to hold an investment before needing to access the funds. It plays a critical role in determining your investment strategy.

Categories of Time Horizons:
  • Short-term (0-3 years): Saving for a vacation, a new car, or an emergency fund.
  • Medium-term (3-10 years): Saving for a down payment on a house, starting a business, or funding children’s education.
  • Long-term (10+ years): Retirement, estate planning, or long-term wealth accumulation.

Step 3: Determine Your Risk Tolerance

Risk tolerance refers to your ability and willingness to endure market volatility. It’s influenced by your financial situation, time horizon, and psychological comfort with taking risks.

Assessing Risk Tolerance:
  • How would you react if your investments lost 10%, 20%, or 30% of their value in a short period?
  • Are you comfortable with the idea of market fluctuations in pursuit of higher returns?
  • Do you have a backup plan if your investments perform poorly?

Step 4: Identify Specific Financial Goals

With an understanding of your financial situation, time horizon, and risk tolerance, you can now identify specific financial goals. Clearly defined goals will provide a roadmap for your investment strategy.

Examples of Specific Goals:
  • Retirement: Accumulate a certain amount by a specific age to ensure a comfortable retirement.
  • Education: Save enough to cover college tuition for your children.
  • Home Purchase: Save for a down payment on a house within the next five years.
  • Wealth Building: Grow your net worth to achieve financial independence.

Step 5: Prioritize Your Goals

Once you’ve identified your goals, prioritize them. Not all goals will have the same level of importance or urgency. Prioritizing helps you allocate resources effectively and stay focused on what matters most.

Prioritization Tips:
  • Categorize goals into essential (e.g., retirement, education) and non-essential (e.g., vacation, luxury purchases).
  • Focus on high-priority goals that will have the most significant impact on your financial well-being.

Step 6: Communicate Your Goals with Your Investment Advisor

With your goals clearly defined, it’s time to share them with your investment advisor. Effective communication with your advisor is crucial to developing a tailored investment strategy that aligns with your objectives.

What to Share with Your Advisor:
  • A detailed overview of your financial situation.
  • Your specific, prioritized financial goals.
  • Your time horizon and risk tolerance for each goal.
  • Any changes in your financial situation or goals over time.


Setting and clearly defining your investing goals is a fundamental step towards achieving financial success. By following the principles outlined in Mark Matson’s Main Street Money, you can identify your goals, prioritize them, and effectively communicate them with your investment advisor. This collaborative approach will help you stay on track, make informed decisions, and ultimately reach your financial aspirations. Happy investing!

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