Where I want to go? Your financial goals

Knowing what your financial objectives are is decisive to be able to make investment decisions, since not all products are suitable to achieve all objectives.

For example, an investment in shares of companies with growth expectations and a high potential return may be adequate to achieve some objectives (medium-long-term capital accumulation), while a fixed-income product that provides safe and regular interests could be indicated to get others (increase in current income).

The financial objectives will depend on the personal circumstances of each person and vary with the different stages of life, so it is advisable to review them from time to time.


Accumulation of capital as a forecast of events

Most experts advise having at least the equivalent of 3-6 months of expenses reserved in an emergency fund. As the objective of this fund is to be able to deal with unexpected events (a repair or other extraordinary expense, a temporary loss or loss of income), it must be composed of very liquid assets, always available, such as bank accounts at sight, Treasury bills or a money market investment fund.

Accumulation and revaluation of capital for major acquisitions and expenses

  • The entrance of a house
  • The entrance of a car
  • to set up a business
  • a home renovation
  • The education of children
  • a wedding
  • a vacation
  • for retirement

As we will see in the next section, these objectives are closely related to the time available for their achievement.

The accumulation of capital for retirement should be among the most important personal financial goals for anyone. For most, a good supplement to the Social Security pension is essential to avoid compromising the standard of living after retirement. With current life expectations, that means having enough savings for 20-30 years and adjusted for inflation.

Increase in current income

For those with limited income (for example, retirees), a common goal is to receive a regular monthly supplement. Fixed income (bonds and obligations of the State or of highly rated private companies provide fixed interest with low risk (if the securities are held until their maturity), and could be indicated to achieve this objective. Equities (shares) of companies Consolidated companies that pay regular dividends can also be sources of income, although not fixed or guaranteed.

Set specific and quantified objectives

It is not enough to have general, in concrete objectives. It is always convenient to establish specific and quantified objectives that motivate you and give you an address, as well as establish a time frame for your achievement. The objectives must be realistic and attainable.

For example:

  • Instead of “financial security”, it could set the objective “to have a net worth of € 200,000 before the age of 60”.
  • Instead of “being able to give my son a good education,” “accumulate xxx euros in an education fund before January 1, xxx.”

You can consult the “How to reach the end of the month” block for a more detailed explanation on how to set financial goals.

Most people have several financial goals and probably need more than one investment product to get them all. Therefore, it is important to prioritize the objectives by their importance. The most important goals will usually require more caution.

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