Goals-based investing: Why it’s good for financial planning

Canada Life - Sep 13, 2023
Let’s look at the basics of what goals-based investing is and how it can help you
Goals-based investing

What is goals-based investing?

The objective of goals-based investing is all about helping you, the investor, reach your goals. It sounds like an obvious concept, and you’re probably thinking, “How is it different from what I’m doing right now?”

The trend towards goals-based investing represents a shift in the way you may have thought of investing and how your portfolio was designed. Goals-based investing is an investment approach that places an emphasis on defining and achieving your financial goals. Rather than traditional investing which may not consider each of your financial goals individually or as thoroughly as goals-based investing.

Sure, you may get a positive return, but does it matter if you can’t ultimately achieve your goal of buying a house or saving for retirement? When you’re working so hard to save and invest your money, it’s important your investments are also working hard to help you live the life you dream of.

You and I can work together to follow your progress over time, making sure whether your money is invested through a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), you’re on track for your goals.

What are you saving for?

With the goals-based investing approach, you’re in the driver’s seat of your own investment strategy as your plan is tailored to your financial goals. Success is measured by whether your portfolio is on track to meet your unique goals and needs. These milestones can be short-term, like buying a new car, or long-term, such as buying a vacation home.

It's a helpful approach because you're actively involved in working with me to build an investments strategy closely aligned with your life goals. With this new perspective, you may be steadier with your approach and less likely to panic with market fluctuations.

Investing based on your goals also considers the amount of time to achieve them, along with how risky the investments can be. Saving for a short-term goal, such as a vacation in a few months, might involve more risky investments than saving for a home in 10 years.

How do I start?

Start thinking about your life goals and write them down. You can talk about it with your partner, family or close friends. Not sure about where to start? Consider some common financial goals:

  • When do you want to retire and what type of lifestyle do you want?
  • Are you planning any large purchases, like a home, a car or a vacation?
  • What about saving for education, whether it’s for yourself, your children or grandchildren?

Your life goals are unique to you, and there’s no reason why your investment strategy should be any different. Goals-based investing may help to increase the chance of reaching your financial goals.

Let’s talk

I’m happy to answer any other questions you may have on goals-based investing. Let’s schedule time to talk about how products like Constellation Managed Solution program may be right for you.