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Whether you have been investing in real estate for decades or you are just beginning to think about making investments, it’s important to have goals to keep you on track. Setting manageable investing goals can make a huge difference when it comes to motivation and direction. However, it’s not always easy for investors to determine how to set them, let alone how to achieve these goals. Thankfully, there are some great tips that investors can put into practice to help them maintain a trajectory for successful investing and long-term financial independence.
How to set investment goals
Before taking steps toward reaching investment goals, it’s necessary to have your goals in place. Even if you have a vague idea of what you want to accomplish, taking the time to set goals can make a huge difference in your ability to stay motivated and make choices that serve your interests as an investor. Here is how to start setting investment goals:
Start with the big picture
Most people have an idea of where they want to be in the future, so start with the big picture when setting investment goals. Think about where you want to be as you enter retirement. Where do you want to live? What kinds of experiences do you want to have? How much income do you want to have during your retirement? Answering these questions will give you the vision to look forward to so that you can craft your goals accordingly.
Make categories of goals
Once you have a big picture vision for the future, write out three categories of goals: short-term, mid-term and long-term. Your long-term goals might include some of the things that you brainstormed when you thought about your vision for the future. Short-term goals are goals that can be completed in as little as a couple of months or as long as a couple of years. These goals might include things like setting up an emergency fund or cutting monthly spending on takeout. Mid-term goals include things that you can reasonably accomplish within several years. These goals might include paying off a credit card or adding to an investment portfolio.
Create SMART goals
Not all goals are created equal, so it’s important to focus on making goals that set you up for success. SMART goals are goals that follow a basic formula: specific, measurable, achievable, relevant and time-based. One of your goals might be to generate enough investment income to quit your day job, but that isn’t specific enough to actually work towards. A SMART goal might be to save enough to purchase a rental property in two years. This goal is specific, it can be measured, it is reasonably achievable, it is relevant to a larger goal and it is time-based. If you are having a hard time making your goals SMART, it might be a good idea to reevaluate your goals and adapt them to become more effective.
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Achieving investment goals
Once you’ve taken some time to set out investment goals for yourself, it’s time for the hard part—making them happen. Looking at a list of investment goals can be daunting, but all it takes is some small steps to get yourself headed in the right direction:
Evaluate your financial situation
A lot of people take a passive approach to finances, but that attitude can be a huge hurdle when it comes to achieving investment goals. Take stock of your current assets, your debts and your credit situation to get an idea of where you’re starting. It can be helpful for investors to consider their total assets against their total debts for an accurate representation of total assets minus debt. You might find that your assets are outweighed by your debt, and that’s something that you can focus on as you work towards a better financial future.
Set a budget
Budgeting seems pretty basic, but a lot of people don’t have a budget in place and even people with a budget might not follow it the way that they should. While discretionary purchases can be tempting, the long-term benefits of exercising restraint in purchases far outweigh the temporary challenge of being frugal. There are lots of free budgeting apps and programs that make it easy to track expenses and increase savings quickly.
Don’t take on too much too fast
Moving too quickly by taking on too much can derail your investment goals. While it can be tempting to try and do everything at once, it isn’t sustainable and it’s likely to cause burnout before long. Instead, take small steps and focus on what you can reasonably achieve in just a few days, weeks or months. Small wins will help keep you motivated to work towards all those bigger goals.
Learn as much as possible
Investing in real estate can be incredibly complicated, even for investors who have decades of experience. With that in mind, it’s important to always pursue opportunities to learn more about investing and develop a wealth of knowledge on investing topics. There are a lot of ways to do this including reading online investment resources, subscribing to investment publications, networking with other investors and finding an investment mentor to give you advice.
It’s easy to get discouraged when investment goals feel out of reach or unexpected hurdles come up and get in the way of your accomplishments, so it’s important to have the discipline necessary to stay consistent. The longest-lasting changes come with small, consistent steps taken every day. Over time, you will be amazed by how much of a difference a consistent investment approach can make.
Create the right partnerships
Investing mistakes happen all the time. However, if you are partnering with the right team to help you reach your investing goals, mistakes will be minimized.
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Creating the right partnerships today will create a goldmine in the future.
So, what are you waiting for? Get to work on establishing some investment goals to keep you on track for success as an investor and to help you make your vision for your financial future a reality. Taking goals from your brain and putting them on paper makes them feel more tangible and can make it easier to be successful when it comes to financial planning and investment management.