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Goal setting in life is important because it can help individuals to focus their behaviour and remain motivated. This in turn can lead to better performance on tasks, helping contribute towards higher levels of personal and professional success. The story is no different in finance.
Setting financial goals for investors allows them to focus on decisions that will contribute to their overall objectives, rather than monitoring the outcomes for a range of individual investments. This is important because individual investors are prone to the ‘disposition effect’, a widely documented behavioural bias whereby investors are more likely to sell their better performing holdings than their losses. Over time, this effect can adversely affect total investment returns.
Yet faced with constantly moving financial markets, the possibility of changing financial circumstances or investment requirements, as well as a wide range of financial products and capabilities, investors need to put in place a robust and realistic investment framework.
Architas’s Lorna Denny sat down with Capital Group’s Claire Swinden to discuss how investors might approach their investment goals and the importance of investment planning. Concise and highly informative, it highlights some essential issues for consideration as well as providing investors with a helpful checklist.
The first in our Investment Basics podcast series, it’s ideal for those starting out on their investing journey but should also prove useful for more experienced market participants. Happy listening!
Statements attributed to an individual represent the opinions of that individual as of the date published and may not necessarily reflect the view of Capital Group or its affiliates.
Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.
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