Financial goals and investing for your future

Creating goals can be a great way to focus your finances and help you invest towards your future.

Authored on
24 Nov 2022
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Category
Why invest?
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Read time
  4 minute read

One very good reason to invest is to help you achieve your financial goals. We all have them, and we should all consider whether investing could help us achieve them – providing we have the time (and spare cash) to do it.

In this article we talk through the types of financial goals you could set yourself, how investing towards them could be beneficial, and how thinking about your goals can help you make your investment decisions. Let’s go!  

What is a financial goal? 🥅 

Well, it’s a life aim which requires a certain amount of money to achieve it. Usually quite a bit of money otherwise we’d get on with it now! A nice example of a financial goal is buying your first home. If you’re like the majority of people, you’ll be buying with a mortgage but will need a deposit (an upfront lump sum of money which is a certain % of the house price) to secure your mortgage, and the house. A deposit is usually in the tens of thousands of pounds. That’s a lot of money, and a financial goal many choose to aim for.  

Let’s look to the future then. 🔮 What are some of the financial goals you could aim towards? (Yours may be different!) 

  • Your first home! 🏠 

  • Your dream holiday 🏖 

  • Wedding / lavish birthday party (why not??) 🎉 

  • Your second home!! 🏘 

  • Kids (maybe not right now, but good to remember they can be an expensive life addition!) 👶 

  • School/uni fees for those kids 📚 

  • Living-your-best-life purchase, whatever that may be…🏍 

  • Your dream retirement 🏝 

  • A rainy day and anything in between! ☔ 

How investing can help you achieve your financial goals...  

All of these goals come with a hefty price tag. And if inflation has its way, that price tag will only increase. Investing your cash could help you beat inflation and achieve your goal(s) sooner than you think.  

Take the financial goal of ‘your dream retirement’ – pensions all across the world are invested because, over time, investing your savings can grow them. And it could be the difference between retiring and retiring in style. 🏝 Whatever you’re aiming towards, investing your spare cash for the life you want in the future can help you get there. 

When setting and investing for your financial goals remember to be realistic. Think about how much you want to build up and by when carefully, and make sure you don’t overstretch yourself. Goals are important but make sure you’re covered for everything else too! And remember, saving and investing for your future can be a little and often activity – big ol’ lump sums aren’t necessary. 

We see a lot of content about investing for financial goals, but it’s important to only invest for your long-term ones. For any short-medium term goals – perhaps doing up the kitchen or a week away next summer – it’s a greater risk to invest that cash in case the market dips just as you want to take your money out. You’re usually best-off sticking to savings when you want to achieve your goal in less than five years. Not advice (Dodl doesn’t offer advice), just a word of caution! ⚠ 

…and how financial goals can help you invest 👌 

Working back from your financial goal can be a great way to help you make your investment decisions, like which investment account to choose, how long to invest for, how to invest and what to invest in. All the biggies! Let’s look at this decision process with dream retirement as an example, just to give you an idea. 

 

✨ Your goal goes here ✨ 
Example: dream retirement
Which investment account matches your goal?  

Dream retirement is an easy one: a pension – it’s what they’re made for! 

If you’re not sure what’ll work for your financial goal, read up on choosing an account.  

How long to invest for? (When do you want to achieve your goal by?) 

Well, with a pension you won’t be able to take your savings out until you reach 55 at the earliest (up to 57 from 2028). So you do the maths from here – how long have you got?  

You may have a different timeframe in mind for your own financial goals but remember when investing for them they’ll need to be at least 5 years off. 

How to invest? (How much do you need for your goal and how do you want to save towards it?) 

Would little and often work, like you would for a savings account? Or maybe lump sums are more your style? There’s no right answer but remember to work this around what you can afford and what works best for your goal(s). 

Always think about what you can afford to invest first, then that the amount your investing will be enough for your goals. Do also remember that investments aren’t guaranteed to bring you returns. 

What to invest in? 

Now you know how long you’re investing for, this can help you make your other investment decisions. A general rule of thumb: the more time you have, the more risk you can usually afford to take. Looking at the example, the further away you’re planning to retire, the more risk you might be able to take when deciding what to invest in. 

When choosing your investments, your risk appetite is also key – make sure you always feel comfortable with the risk level of your investments. 

 

Looking ahead 🔭 

Financial goals will keep coming up because it’s super important to always keep them front and centre - they’re the reason you’re investing after all! If you’re ready to start investing for your goals, go ahead and open a Dodl account. 

 

Get started today

 

🔔 Remember, investing carries risk and nothing in this article should be taken as advice - Dodl doesn't give advice, but we do hope the info is helpful!


It's important to know

You have to be solely a UK citizen and resident to open an account with Dodl. If you're not solely a UK citizen but still want to invest, you may be able to open an account with our parent platform AJ Bell. 

The past performance of investments isn't an indicator of their future performance and their value can go down as well as up. This means you could get back less than you originally invested. 

Dodl doesn’t offer any advice so if you’re not sure about the risks involved with investing, you should speak to a suitable financial adviser. 

How you're taxed depends on your circumstances, and tax rules can change in future.