Investment Management Goals: Realistic Targets CWM Can Help You Work Towards

Investment Management Goals: Realistic Targets CWM Can Help You Work Towards

Investment management goals can seem complicated at first. But ask yourself, what are you ultimately trying to accomplish… are you trying to fund your retirement? Provide college funds for your kids? Shift wealth to the next generation of your family? Maybe you want to accomplish all of those things! - Simply put, these are your investment goals. How you get there is often more complex. 

Having a clear sense of what your goals are and how they fit together can help you make investment decisions that lead to success. In this article, we’ll discuss some of the most common investment management goals and how we at Cooke Wealth Management can help you achieve them.

What Is a Realistic Investment Goal?

Successful investors employ different strategies and objectives, but a realistic investment goal can be broadly defined as the rate of return that is likely to allow you to meet your specific goals with time to spare. Investment planning begins with an assessment of what is important to you and what outcomes spell success. 

First, start by identifying your motivations for investing in the first place. If you're trying to fund retirement, then this will drive the type of investments that you need in order for it to happen successfully. Some things like funding college are similar in many respects but may require different account types or strategies, and perhaps a compressed timeline. 

Once you figure out your desired outcome, you can work backward to find a strategy that might help make this come true with minimal risk or distraction from other life events.

Your Goal Drives Your Strategy

If you want to better understand your investment planning needs, ask yourself these common questions:

  • Do I have a plan to ensure my current investments provide the income I need in retirement?

  • What is my goal for wealth transfer in order to leave a legacy for my family? 

  • How do I plan to pay for my child’s college expenses?

  • Do I have appropriate reserves? 

At the end of the day, money is a tool to accomplish the goals God has placed on your hearts. So, your goals should drive your overall investment strategy.

Investment goals typically involve some measure of safety, income, and capital growth. While no investment is 100% safe, if you’re focused on safety you might look to money markets, Treasury Bills, and CDs. These vehicles offer some of the lowest-risk investments you can buy. Of course, they also come with the highest opportunity costs (often providing less growth over time).

If you’re an income investor, you are generally looking for regular payouts. Most often, these investors have already retired and depend largely on their investment portfolio's income to meet their monthly budgets. These investors might hold more bonds or preferred stock shares.

Investors looking for capital growth are typically still anticipating major life events such as paying for a college education or retirement. Their investment portfolios often hold more stocks.

Whatever your investment goals, a qualified wealth management professional can help you make them happen. At Cooke Wealth Management (CWM), we aim to match your goals and timeline with an appropriate strategy by providing solutions and insights tailored to your specific situation and comfort level with risk. 

Let’s look at a few other goals we frequently come across with our clients…

Goal 1 - Fund Your Retirement

Many Americans are living longer than ever. The U.S. life expectancy is nearing 80 years old, and if you take care of your health, you might realistically expect to live into your 90s. The post-career season of life is getting longer for more and more people.

Consequently, retirement planning is one of the most popular investment planning goals. The goal of investing for retirement is most often to not run out of money. To provide enough money to finance you and your spouse’s desired lifestyle after you leave your career and for the remainder of your lives. When considering how much you need to save, you’ll want to take into account how much you have previously saved, returns on you’re current retirement savings, and how much you can afford to save. There are a handful of retirement calculators out there that can help you estimate how much you should be saving given these factors.

How much money you need for retirement depends on a number of factors, including inflation, social security benefits, market returns, your lifestyle, and your personal life expectancy. 

Your income and spending during retirement will also affect how much you need. It will also impact how and when you begin to take distributions from your retirement savings. Start by talking with a financial advisor to understand your specific needs. They can help you determine how much you need to have for your desired lifestyle and goals in retirement. Once you know how much you'll need, work with your advisor to develop a personalized investment strategy that targets your specific goals and timeline.

Accumulating the wealth needed to provide for your family's needs during retirement is one of the most important investment goals you can have. 

Goal 2 - Increase Wealth To Leave a Legacy

"A legacy is an enduring impact that you make on those who outlive you," writes financial expert Dave Ramsey, "but it’s not limited to possessions or money. A legacy is an opportunity for you to change the world for good!"

Leaving assets in your estate plan or transferring assets to loved ones through inheritance can allow you to continue helping them even after you're gone. Maybe you want to bestow a major gift on a ministry or organization you support. Or perhaps you are concerned about a spouse you might leave behind.

Depending on what you’re leaving behind and your motivation for doing so, will help you structure your overall financial and investment strategy, including the type of vehicles you use. It might be important for you to make a realistic plan for leaving behind a business, real estate, investments, cash, art, jewelry, or other items of value.

You might even consider transferring some of these items, or wealth, while you’re still alive. Your financial planner and your attorney are important allies in your legacy planning process. Remember that if you don't make a plan for your own legacy, someone else will have to handle it for you. 

Goal 3 - Pay For College

Many students borrow money to pay for college. In fact, the average undergraduate assumes about $30,000 in debt to cover the cost of their education. This leaves recent college graduates with a heavy financial burden. With college costs increasing each year, many parents and grandparents want to help pay for their children's college education. 

Many factors determine the cost of college. As of 2022, the average annual cost of tuition for an in-state public institution stands at $10,423 while an out-of-state college costs $22,953 and a private school runs $39,723. Room, board, fees, transportation, and miscellaneous costs can double these figures.

Of course, financial aid packages, including grants and scholarships, along with early-college options, online courses, and need-based assistance can all bring down the cost of an education. In some states, community colleges provide free college courses, allowing students to complete up to two years of their education at little or no cost.

All these factors mean it can be important to know your student's aspirations if you hope to develop a realistic plan.

How much you choose to assist your children with their college expenses will drive the type and timing of your investment strategy. You will probably want to save up and start investing early, while they are still young enough that there may be room for growth.

How to Set a Timeframe for Your Financial Goals

The timeframe for your goals is often the second piece of what drives your investment strategy. Without a deadline, a goal is simply a wish. You may need a timeline for accomplishing your investment goals.

Before you set a target, think about your goals and how much you need to invest each month in order to make progress towards them. Your target will be different if you're saving for retirement, college tuition, or another type of goal. Keep in mind, the target you set will likely be based on an average annual return. Because it's an average, there will be years it will be higher and years it will be lower than your desired return or even negative. This is the reality of investing: we must accept that market cycles are normal and will occur. Your financial advisor is there to walk with you through these cycles and make adjustments when needed to help keep you on track.

Investments generally, over time, earn a positive rate of return that can compound significantly. So the more you invest and the earlier you invest it, often means you will have a much better probability of reaching your goal. 

With a good understanding of how much should be invested and what rate of return is needed over time to reach a particular goal, you can be well on your way to making progress towards that goal — whether it's retirement, wealth transfer, or college savings.

Short-Term vs. Long-Term Financial Goals

Typically, short-term goals are those you hope to achieve within the next three years. Mid-term goals are achievable in 3-10 years. Long-term financial goals take more than ten years.

An example of a short-term goal might be buying a new car. A mid-term goal could be paying off all non-mortgage debt, or grand family vacation. A long-term goal is usually something like funding retirement or becoming financially independent. 

Your timeframe will help decide how much and in what financial vehicles you invest.

What Types of Investment Accounts Could Help You Reach Your Goals?

There’s no shortage of investment account types; you have retirement accounts, college savings accounts, Trust accounts, Joint accounts and more.

Each of these account types have different tax consequences or in some cases we would say opportunities.

If you are looking to fund retirement, you may want to start investing in a Roth IRA, a traditional IRA, or an employer-sponsored account such as a 401(k). For college savings, you might consider a 529 plan, which is a tax-advantaged account specifically for educational savings.

The sooner you invest, the more time your money has to grow and the more income it might generate — ultimately, providing enough to last throughout your lifetime. 

How CWM Can Help You Set and Meet Your Investment Targets

Cooke Wealth Management is committed to providing you with an accurate and thorough financial analysis, aimed at helping you set realistic investment goals and targets. We also work to equip you with the knowledge necessary to meet those goals. The first step is for one of our team members to speak with you about your goals, current assets, income, and other key points.

To help you work towards the investment goals that you want to achieve, CWM's team of experts is available to answer any questions you may have. Whether it's your first time saving for retirement or another important goal, like sending your kids to college, we can help. Call us for an appointment today!

All investing involves risk and past performance does not guarantee future performance.