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Setting your financial investment goals (for 2021 and beyond)
May 12, 2021

Dreaming of a shiny new car, ridding yourself of debt, or perhaps an extended overseas trip in a post-COVID world? To some, such dreams may seem far off, but with efficient money habits and solid financial goals in place, it’s certainly possible to transform those dreams into reality. Saving as much as you can is one way to go about it – but integrating investments into your saving strategy is a great way to make your savings work harder for you.

The rise of the self-directed investor

“KiwiSaver and the rapid rise of online retail investing platforms mean investing is becoming truly mainstream”, said FMA CEO Robert Everett earlier this year.

COVID and the work-from-home economy has resulted in a growing interest in alternative income sources. With international travel ruled out, as well as a reduction in other areas of spending, disposable income has increased for some people – despite it being a tough time for many. This, combined with record low interest rates, easy access to capital markets through online investment platforms, volatile markets offering the potential for gains, as well as investment success stories prolific on social media (not to mention the ongoing “cryptocurrency craze”), has meant the world has seen a significant increase in retail investors.

In particular, the convergence of investment platforms with mobile devices has seen millennials increasingly engaged in personal wealth management, looking to explore new options since being locked out of an overheated property market. ‘Investment Clubs’ are exploding in popularity at New Zealand universities, with excitement building following fruitful investments, such as the recent international acquisition of Kiwi tech companies, Seequent and Vend, which rewarded shareholders well. It appears we have a growing sector of relatively inexperienced retail investors who may be looking to move past initial curiosity and experimentation, to developing a longer-term investment strategy and a better understanding of risk. This is where financial investment goals can help.

Setting SMART goals

Before you say, “I want to be a millionaire”, ask yourself if this is SMART? The SMART framework helps to define your goals to ensure they’re achievable.

Specific: Ensure your goal is clear and unambiguous. Using the 5 Ws (who, what, where, when, why, how) is a good way to do this.

Measurable: Put specific criteria in place to measure progress towards your goal.

Attainable: Make sure your goal is attainable. Do you have the resources and capability to achieve your goal?

Realistic: There is no point setting a goal if it’s not realistic. Ask yourself if it can realistically be achieved within the parameters you’ve set?

Timebound: Your goal must be timebound, with an end date or deadline to help create a sense of urgency or motivation.

An example of a SMART goal, therefore, would be, “I’d like to progress my investment portfolio, so by the end of the year, I’m aiming to have invested $5,000 into capital markets, across at least 3 different investments. This means I’ll need to put $165 aside each week, for the next 7 months.”

Considerations for setting your financial investment goals

Make sure you have an emergency fund
Before you go investing all your money, it’s essential to maintain an emergency fund. Many financial advisers recommend a minimum of 3 months living costs (taking into account expenses such as utility bills, food, mortgage or rent payments, insurance, transport and so on) – some say 6 months may be better, if you’re able.

Get on top of your monthly budget and managing your money
You should know how much you’re spending – and on what. This helps reduce ant expenses (that daily $6 coffee can stack up pretty quickly), to progress your savings and investment goals.

Prioritise diversification
“Never put all your eggs in one basket.” The same applies to investing and making sure you have a diversified portfolio. Having a mixture of investments, including different types (such as shares, bonds or funds), as well as different sectors of the economy (such as technology, healthcare and agriculture) helps to reduce your risk. If one of your investments underperforms, your portfolio will be supported by other investments. Conversely, if your investments are spread across lots of different sectors, you have a greater chance of having interests in a sector that outperforms the rest of the market.

Consider your risk appetite – weigh up risk vs reward
It’s generally accepted that the higher the risk, the higher the reward, but it’s important you understand the risks, before making any investment decisions. The Financial Markets Authority (FMA) have highlighted a few risks to consider when using online investment platforms. It’s also important to ensure your risk appetite aligns with your investment intentions and timelines. If you’re looking at a long-term investment period of at least 10 years, you might consider higher-risk growth investments, as it’s likely the peaks and troughs of your investments will even out across a 10-year period, resulting in higher returns. If, however, you’re only looking at a 3-year investment period, you might consider more conservative investments, which are a “safer bet” for making returns within that time – albeit less. Sorted has a helpful tool to work out which investments best suit your risk appetite and needs.

Categorise your goals based on when you’d like to achieve them
This can be separated out into short, mid and long-term financial goals.
    • Short-term: 6 months to 5 years
      Mid-term: 5 to 10 years
      Long-term: more than 10 years


  • Set a target date for each financial goal
    Setting a target date means you know the timeframe you’re working towards. You might want to save enough to spend your 10th wedding anniversary in Europe, for example. It helps to be specific with your target date, even if you’re not certain on it. You can always adjust the date later on.

    Organise your financial goal by order of priority
    Prioritise each financial goal as a “critical” goal, “need” goal and “want” goal. For example, saving enough for your emergency fund is a critical goal, buying a phone because yours is breaking is a need goal, and trading in your car for a new one, even though it works fine, is a want goal.

    Plan for the future
    It’s important to consider your long-term goals. Whether you’d like to buy a house, save for your wedding, pay for your children’s’ education, or enjoy a comfy retirement, it’s important to think about these things now and plan accordingly. If you work out a rough timeframe, then you can work backwards and figure out how much you need to put aside each month. Consider aligning long-term goals with long-term investments to generate a return from your savings. Sorted has created a helpful graph to map the difference long-term investments can make to your savings balance – particularly if you continue to make regular contributions. Just complete the questions to have a look.

    Think about your values
    As a retail investor you have an opportunity to invest in alignment with your values, to create a higher value economy and to support businesses to grow and succeed. You might consider adding some impact investments to your portfolio – investments that have a positive social or environmental return, as well as a financial return. Catalist supports social impact investments, using a leaf icon to distinguish them from other investments on our market. You can sign up for a Catalist account and opt in to our newsletter to stay updated with any new social impact listings.

    Consider investments in small-to-medium-sized businesses
    Catalist will soon be launching Aotearoa, New Zealand’s stock exchange for small and medium-sized businesses. Whether it’s part of your diversification strategy, your interest in social impact projects and values-based investing, or you’d like to be a part of growing New Zealand’s SMEs, consider Catalist as part of your plan as you set your financial investment goals over the longer term.

    By Michelle Polglase