In light of the challenging economic conditions that Ghana faced in 2022, many people are wondering whether it is worth investing, especially in local markets, given the challenges posed by inflation, exchange rate depreciation and the Domestic Debt Exchange programme. Although the current questions about the markets are understandable, , there is a method of investing called goal-based investing that can be adopted to meet financial objectives even in the most difficult of times. In this post we will explain goal-based investing and discuss why it is so important.

 

What differentiates goal-based investing from other methods of investing is that the focus is not solely on generating returns but specifically meeting a specified financial target within a specific period of time. For example, an individual may have a sum of money they want to invest but they have different financial goals they want to meet. Goal-based investing would require that they itemize these financial goals, assign timelines to each of them, and then speak to a financial advisor to understand how to allocate the funds in order to meet each of these goals in turn.

 

Goal-based investing protects investors by matching their goals with financial instruments which works best within their investment timeline. So, if an investor wants to build an emergency fund, save for their children’s education, buy a home, and create a retirement portfolio, the money should not all be invested in one instrument without a differentiation for each particular goal. This is because a retirement portfolio may require financial assets with risk characteristics totally different from that of an emergency fund. Providing information about your goals to your financial advisor has the potential to significantly improve your investment outcomes.

 

Investing with financial goals in mind also helps an investor to stay the course during turbulent times in order to benefit from returns in the long-term. If your goal is to save for your children’s education in 10 years, then you will be less likely to withdraw your funds due to an economic downturn. However, where there is no plan for each investment, an investor is likely to withdraw all their funds when there is negative turn, and risk missing out on a rally when the market recovers.

 

If you have financial goals which you want to start investing towards, we at IC would be happy to help you to achieve them. Talk to IC today on +233(0)308250051 or email clientservice@ic.africa. Our team of experienced investment advisors will guide you on how you can invest your money to meet each of your financial goals.

 

Thank you for reading.