Know yourself

What are your investment goals?

The first step in creating an investment plan is deciding what it is you're investing for. Your investment goals can be short term for example a down payment for a house or next year's college tuition. Perhaps your goals are intermediate term for example college tuition for your children might be eight or nine years away. And your investment goals in long term might be your retirement in 20 years.

What are your investment objectives?

As an investor, it is important to understand the different types of investment objectives in order to select the most appropriate objective that fits your individual needs, the following is a list of three most frequently used investment objective as they relate to IU investment:  

  • Safety & Preservation of Capital  One of the investment objectives with the lease level of risk is safety and preservation of capital. Investors who classify themselves under this type investment objective are primarily focusing on preserving their existing asset base through an emphasis on cash and cash equivalents.
  • Income The second type of investment objective, which has a slightly higher risk level than safety and preservation of capital, is the income objective. Investors who choose this particular investment objective primarily focus on the continued receipt and steady stream of income.
  • Growth   The third type of investment objective, which is less conservative and more risk-oriented than the preceding two objectives, is the growth objective. Investors who classify themselves under this objective primarily focus on generating capital appreciation.

How much time do you have? 

Next, consider your time frame - in other words, how long do you have until you'll need your money? Setting time frames for each of your goals is keys because it can help determine how long your money can be working for you. Some of your goals, like saving for a vacation, may be short-term and less than four years away. Others, such as funding college education for your children or saving for retirement, may be longer-term and more than 10 years away. And it's important to remember that an investment which may be appropriate in helping you achieve a longer-term goal may not work as effectively for those that are short-term. Determining a time frame for each of your goals will guide you as you select your Investment Units.

How much money do you have?

Before you make any decisions about investment, you need to assess where you are currently relative to where you want to be. Being by taking a "financial inventory" to determine how much money you have to invest and how your other assets are already allocated. Remember, your total financial situation may dictate a more conservative or aggressive strategy and is a key factor in influencing the types of Investment Units that are most appropriate for reaching each of your goals.

What kind of investor are you?

Along with determining your investment goals and your time frame, you'll want to also consider what type of investor you are - in other words, what is your risk tolerance? No matter what type of investment you select, there are certain risks and potential rewards associated with it. Depending on the amount of time you have until you need your money, some of those risks may be more acceptable than others. If you are like many investors, you may invest more conservatively for your shorter-term goals and more aggressively when your goals are further into the future.
  previous       next