4 Compelling Reasons to Rethink Your Investing Goals

One of the keys to investing success is to set investing goals. However, there are times when you might want to rethink your investing goals. There’s no point in working toward investing goals that no longer meet your needs.

Here are 4 reasons it might be time to rethink your current investing goals:

1. Your Priorities Are Different

Before you decide to invest, you need to know what you are investing for — and understand what goals you’re hoping to reach with those investments.

There are many reasons to invest, from creating a steady stream of income, to building up a nest egg for retirement, to trying to get enough money for a down payment on a house.

What are your most important priorities?

When you first set your investing goals, you may have had different priorities. You may have been more interested in saving enough for your child’s college.

Now, though, perhaps you realize that retirement is a better goal. The way you invest for your child’s college is going to be different from the way you invest to build a retirement nest egg.

Acknowledge your priorities have changed, then set new investing goals that reflect your new priorities.

2. Your Circumstances Have Changed

We can’t predict everything that will happen to us. There are times when a job loss or other unexpected situation can change your circumstances — and lead to re-evaluating your investing goals.

Perhaps your original investing goal included setting aside $500 a month in a retirement account. However, if your income has decreased dramatically in recent months this goal may no longer be feasible. You might have to adjust your goal so you’re setting aside only $200 a month, for now.

Likewise, it makes sense to change your investing goals when you make more money. You might be setting aside $500 now, but an increase in income might mean that you can now set aside $800 a month.

If you have been investing in an IRA, but you have maxed it out, you might need to adjust your investing goals to include taxable accounts — or consider opening a SEP or SIMPLE IRA with higher annual contribution limits.

3. The Markets Are No Longer the Same

Don’t forget to consider the possibility of changing markets. Some experts believe that current conditions will result in higher inflation in coming decades.

If this is the case, then your $1 million portfolio investing goal might not be sufficient. If you want a secure retirement, you might need a $2 million nest egg.

Additionally, there are those that believe that asset correlation between bonds and stocks could become an issue. If this is one of your fears, your investing goals might need to change to include further asset diversification.

4. The Fundamentals of Investing Have Altered

If your investment goals include more specific items — such as investing a certain percentage of your money in a particular asset or asset class — you might need to make adjustments if the fundamentals have changed.

If your investment in a specific dividend stock is part of your investing goal, and the fundamentals change for the worse, you need a new goal and a new target.

Consider the fundamentals of an asset class or sector, as well as of individual investments. Make changes to your goals based on the changes you see underlying your investments. Tweaking your goals and your approach can help you stay in the game, even when things seem to be falling apart.

Is it time to rethink your investing goals?

Image courtesy of IntheNow at FreeDigitalPhotos.net

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Reader Comments

  1. Anton Ivanov | Dreams Cash True says

    Your advice is especially useful for those with low-maintenance index fund portfolios. After the initial setup they may forget about it for a few years, but it’s important to keep track of your goals, your asset allocation and investments.

    I like to revise my goals at least semiannually and I re-balance my investment portfolio annually to make sure it’s on track to meet my goals.