Investment goals

Everybody has investment goals in their life, from the old adage of saving for a rainy day to planning a comfortable retirement. Managed funds offer a long-term investment strategy that can help you achieve specific goals. Your choice of fund should reflect the type of life event that you are planning for, as its investment style will determine the returns you can expect over differing timescales.

Types of goals

The three most common types of investment goal are:

  •  Retirement planning or property purchase over the very long term
     (15 years or more)
  •  Life events, such as school fees over the medium term (10-15 years)
  •  Rainy day or life style funds to finance goals such as a dream sports car over the medium to shorter term (5-10 years).
  • The minimum time horizon for all types of investing should be at least five years.

Whatever your personal investment goal may be, it is important to consider the time horizon at the outset, as this will impact the type of investments you should consider to help achieve your goals. It also makes sense to revisit your goals with a financial adviser at regular intervals to account for any changes to your personal circumstances; for example the arrival of a new member to the family.

Investment strategies

Investment strategies should often include a combination of various fund types in order to obtain a balanced approach to risk and reward. Maintaining a balanced approach is usually key to the chances of achieving your investment goals, while bearing in mind that at some point you will want access to your money.

This makes it important to allow for flexibility in your planning.


Retirement planning 

The importance of shifting goals can be seen in pension plans, where it is quite common for funds to be more geared towards equities in its early stages to try to build capital.  As the individual grows closer to retirement age, the pension plan will tend to lean more towards bonds to reduce volatility. Exposure to riskier sectors such as commodities or real estate may also be gradually reduced as the individual ages.

A typical pension plan may start out as 60% equities, 30% bonds, and 10% “other”, including real estate or commodities, when the employee starts work. Towards the end of its life it may be 70% bonds, about 20% in equities, and up to 10% in cash. This ensures that the person retiring does not become susceptible to a sudden slump in stock markets just as they are about to cash in the fund.

School fees plans 

School fees planning may involve the same idea of buying a mix of equities, bonds and other investments in order to build enough capital to pay for education. Most are geared to begin paying out after a fixed-term horizon, usually 10 years, with withdrawals allowed incrementally after that to meet the school fees. In this way they need to be more flexible than pension plans that only pay out on retirement.

For this reason, parents often start plans when their baby is born so that they can start paying out when the child starts secondary school at aged eleven, or even years before then if they want their children to go to fee-paying primary or preparatory schools.

Lifestyle plans 

Investment companies can offer 10-year plans or even shorter savings schemes that help pay out for a future holiday or dream car. A large number of products now exist for this, including Independent Savings Accounts that contain stocks and shares, depending on your timescale and willingness to accept risk.

Seeking financial advice

Starting a serious long-term savings project can be daunting, so it is essential that you get good advice on the best plans and funds to choose.

A large network of professional financial advisers exists in Britain to arrange the best financial solutions for their clients. Many operate independently and can offer advice on the whole market. 

Explore getting advice

Defined your investment goals?

Once you have defined your investment goals, take our short quiz to help answer some important questions:

Essential questions

Capital at risk. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed. 
The figures shown on this page are fictional examples to explain the types of investments you may consider. Past Performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.