The Road Less Travelled – the Power of Goals-Based Investing

Would you ever set out on a trip without a clear destination? If so, you might have some fun along the way, only to end up going nowhere in particular.

So it is with investing. If we invest our money with a vague objective like “beating the market,” we’re likely to meander along, from interesting stock to fascinating fund to can’t-miss idea. Ultimately we’ll realize we’ve been on a road to nowhere—all because we didn’t start out with a destination.

At AdvicePeriod, we don’t believe you should invest a penny until you have identified specific goals. Your goals, your timeframe and your tolerance for market volatility, form the basis of a successful investment strategy.

The idea that you have to define success in order to achieve it is not new. But too often, the financial industry is more focused on manufacturing and selling slick products than helping you succeed. As we’ve written frequently, the traditional brokerage industry is riddled with financial conflicts of interest that skew its priorities away from actually achieving your goals.

AdvicePeriod’s business model helps us avoid conflicts. We never earn sales commissions, and because we’re often paid a fixed fee, we are free to focus on helping you achieve the goals that matter most.

That’s “goals”—plural. Few of us invest for a single reason. We want a comfortable retirement, but we also may want to fund our kids’ education. Some of us may have our eye on a second home or a boat. And we all want to be worry-free in our day-to-day financial lives.

At AdvicePeriod, we incorporate each of your objectives into your portfolio. We customize the risk level and time horizon in order to sufficiently protect and grow the money you’ll need.

We typically start by dividing clients’ investment portfolios “buckets”—for example, safety net, large purchase, wealth accumulation and retirement. The investment allocation in each bucket is customized to fit the objective, the time horizon and the risk profile.

Dividing investments into multiple goals can also help us to better handle the market’s uncertainties. At a given point in time, your retirement goal may be down 15%. But your safety-net goal—the most conservatively invested bucket in your portfolio—may well be neutral. Knowing that your emergency cash is safe and readily available, and that you have plenty of time to recoup any dip in your longer-term goals, can create peace of mind and keep you from making rash decisions.

Goals-based investing keeps you on the road to success. It’s the optimal way to achieve each of your unique objectives—and stick with your investment plan no matter what roadblocks you encounter along the way.

Disclosures:

The information provided is for educational purposes only and is not intended to be, and should not be construed as investment, legal or tax advice. The information is subject to change and, although based upon information that AdvicePeriod considers reliable, is not guaranteed as to its accuracy or completeness. AdvicePeriod makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, the information.

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