Determine your investment goals

Hello. My name is Dan Coatsworth. Welcome to part two of AJ Bell’s video series on helping people to get started with investing.

In the previous video, I ran through the reasons why someone should consider investing in the markets compared with simply putting money in the bank.

In this episode, I’m going to shift the attention to investment goals – in other words, establishing the key reason why you want to put your money to work in shares, bonds or other asset classes.

If you have a specific goal at the start, it really helps to focus the mind and provide that ongoing incentive to stash away as much as possible.

Like many people, my first experience with investing was trying to save up for a house deposit. I was paying rent each month and that money was disappearing. I had nothing to show for it, apart from someone else’s roof over my head.

If you owned a house, you might pay the same each month in mortgage repayments as you would do in rent, but you’re actually amassing equity in a property. Once the mortgage is paid off, you own a whole house, which is quite an achievement.

According to Zoopla, the average deposit paid in 2023 by a first-time buyer in the UK for a three-bedroom house was £34,500, based on a £240,000 property price. Investing little and often can be a way of achieving that goal and getting on the property ladder.

There are plenty of other investing goals people aim for. Some have the goal of being able to build a pot of money that can fund an extension to their house or a loft conversion. Others might want to fulfil their dream of having a breathtaking wedding.

Those with children might want to invest money to help pay for their university fees in the future. Or there is the classic reason of simply wanting to build up wealth so as to travel far and wide during retirement.

Many of us will have pinned up a postcard of an exotic place on the fridge, dreaming of being able to visit such foreign lands. That’s quite an incentive to put money into an investment account each month and fulfil your dreams.

Sometimes investment goals aren’t only about treating yourself. It can be sound planning to build up a rainy-day fund as you never know what emergencies come your way that cost money.

You might want to change your lifestyle and consider retraining mid-career and that would require money to help pay the bills while you study. Or you might simply want to recharge your batteries and have a career break.

Some people get tired of working for others and want to start up their own business. This could require a chunk of capital upfront and that’s going to be much easier to stomach if you’ve already been contributing to an investment account.

Finally, you might want to invest to help others. This might involve investing in a portfolio of funds, shares or other assets with the explicit intention of passing this money to children or grandchildren after you die.

Everyone has different types of investment goals, but they can all be made easier by starting to invest as early as possible.

You can get help along the way in form of various Government or employer schemes that either top up your investment account with free money or provide tax-related benefits. We will cover the exact details later in this video series.

For now, thanks for watching and I hope you found the information useful.