Last Updated on October 12, 2025
Overview – Knowing What You’re Working Towards
When starting any endeavour, no matter how big or small it may be, any sensible person will first ask themselves, “What is it that I want to accomplish?” In other words, what specific goals do you have in mind?
This may sound like a trivial question, and may even be seen as a waste of time. However, these beliefs couldn’t be any further from the truth.
Whether it’s starting a business, pursuing an advanced degree, or implementing a new workout regimen, many people are eager to start but don’t have any idea of what exactly they want to achieve. Consequently, they waste precious time, energy, money, and other resources because they don’t know what their idea of “success” looks like.
If they are not careful, investors may also fall for the same trap. By having clear investment goals in mind, they know exactly where to direct their limited resources to achieve their desired results.
Everything Depends on Your Investment Goals
Despite the importance of having investment goals, it’s not a topic that’s discussed nearly as much amongst investors compared to other things.
There’s no shortage of attention given to investment strategies, such as discussing which strategies produce the best results, figuring out which strategies to utilize when dealing with specific investment instruments, or debating which one is the “best” to use under certain circumstances.
Similarly, investors endlessly debate over which investment paradigm/style is best, whether it’s value investing, growth investing, emerging market investing, or countless other paradigms. As the investment landscape constantly shifts, so too does the discussion of which investment paradigm reigns supreme.
Although the importance of investment strategies and paradigms cannot be overstated, these will depend on what investors are trying to do. In other words, without investment goals, worrying over which strategies and paradigms to use is a moot point.
For example, Investor A is highly ambitious, and as such wants to create a large, highly diversified portfolio comprised of investments from all over the world. On the other hand, Investor B has been gifted with a large inheritance and doesn’t have any grand ambitions with these funds; they simply want to grow this money in a way that doesn’t involve taking too much risk.
These different goals will, unsurprisingly, require two very different approaches. However, figuring out what those approaches are depends on knowing what they’re trying to achieve; the strategies and paradigms that may work well for Investor A may be disastrous for Investor B, or vice versa.
It doesn’t matter how ambitious or humble an investor’s goals are; what matters is that they are clearly defined. Everything that an investor decides to do in their career will depend on what those goals are.
Investment Goals Can, and Will, Need to Be Adjusted
Investment goals are, generally speaking, created with the intention of being a long-term endeavour. In other words, investment goals are usually set in stone and rarely, if ever, change.
Based on our discussion in the preceding section, this makes a lot of sense. If an investor’s goals determine almost every action and decision they will subsequently make, then they don’t want to waste any of their resources on “flip-flopping” between different strategies, styles, and other investment activities.
This isn’t to say that investors are prohibited from changing their goals, but rather it’s not something they can always do at a moment’s notice. The longer an investor has been working towards achieving a specific goal, the harder this becomes.
Imagine spending months, if not years, meticulously figuring out which investment strategies to deploy, making steady progress, then trying to undo all of that and take an entirely new direction in a matter of days. Not only would this be incredibly frustrating, but it would also represent a massive waste of time, effort, and energy you’ve already spent on your previous goal(s).
Instead of completely abandoning investment goals, investors are better off making slight adjustments to them as they go along. This enables them to adapt to changing circumstances they will inevitably face without substantially altering what they’ve already been doing.
For example, imagine your investment goal is “to create an investment portfolio that will one day serve as my primary source of income”. You originally planned to achieve this goal by focusing solely on equities, confident that dividends alone should suffice.
However, as you work towards this goal, you soon realize the outsized amount of investment risk you shoulder by placing such a heavy emphasis on equities. Fortunately, your expertise and know-how have also developed, specifically when it comes to using financial derivatives.
Because of this, your overarching goal stays the same, but instead of focusing solely on equities, you decide to incorporate certain derivative instruments (options, futures contracts, etc) into your portfolio to help mitigate the risk you shoulder.
Investors face changing circumstances all the time, and as such, nothing is truly “set in stone.” However, that doesn’t mean the changes they make have to be substantial; small, incremental changes are possible (something we touched on briefly before) without substantially altering the overarching aim.
Can Some Investment Goals Be Too Ambitious?
After discussing the importance of having investment goals, it’s clear that regardless of what investors are trying to achieve, having a “north star” that guides all their actions and decisions is imperative. But are some ambitions beyond an investor’s realm of possibility? Are some investment goals too ambitious to even be worth considering?
To help resolve this dilemma, let’s take a step back and examine the types of goals investors are likely to set. Generally speaking, there are two types of goals: S.M.A.R.T. goals and B.H.A.G.’s.
S.M.A.R.T. is an acronym for Specific, Measurable, Achievable, Relevant, and Time-Bound. On the other hand, B.H.A.G. stands for Big, Hairy, Audacious Goal(s).
S.M.A.R.T. goals are meant to be relatively easy to achieve based on a person’s current skills and available time. However, because of how they’re designed, S.M.A.R.T. goals aren’t meant to be overly ambitious. Conversely, B.H.A.G.s are the major aspirations that people hope to achieve, and are almost always long-term in nature.
These two types of goals are not mutually exclusive, but are instead commonly used in tandem. S.M.A.R.T. goals without B.H.A.G.’s will simply pass a person’s time, while B.H.A.G.s on their own are nothing more than fanciful thinking.
For example, say you’ve set a B.H.A.G. to create a portfolio worth more than $50 million (USD) before you retire at 65 – you are currently 25, work full time, but have not yet started investing. Creating a $50 million portfolio is no easy task, so how do you plan on achieving this momentous goal?
The answer lies in creating several, if not dozens, of smaller, more manageable S.M.A.R.T. goals. These countless S.M.A.R.T. goals are the incremental steps that will ultimately help you achieve your $50 million portfolio.
Some S.M.A.R.T. goals worth pursuing may include allocating a set percentage of your monthly income toward your portfolio, re-investing a certain percentage of your dividends, and purchasing certain investment instruments, to name a few. As your portfolio and financial means continue to evolve, so too will the S.M.A.R.T. goals you set.
As the years pass, you see your portfolio value steadily climb, and you notice that the countless S.M.A.R.T. goals you’ve steadily been achieving have put you on track to achieving your $50 million portfolio B.H.A.G.
What once seemed like an impossible dream is now within the realm of possibility because you’ve broken down this B.H.A.G. into smaller, more manageable “baby steps”.
Many investors set lofty goals, and many of them can be achieved so long as they know how to break them down into hundreds, if not thousands, of smaller, “bite-sized” steps. Investors would be foolish to forget about the power of consistency.
Of course, this isn’t to say that every major goal investors set for themselves will always be achieved. Countless external variables can derail their plans, and the progress they make may not always be enough.
Rather, the point is that even the most ambitious investment goals can become a reality if investors know how to properly approach them and how willing they are to put in the required work.
Wrapping Up
Many investors are eager to advance their careers as quickly as possible, yet don’t have the slightest clue of what exactly they’re trying to achieve one day. Working hard without a clear destination in mind is just an elaborate waste of time.
If investors are serious about their careers, then one of the first things they will do is create clear, well-defined investment goals. Having explicit investment goals in mind is crucial because it will define virtually every decision, strategy, and action investors will make during their careers.
While some investment goals may seem exceedingly ambitious (and some of them certainly are), they can still be achieved if investors know how to deconstruct them into smaller, “bite-sized” steps.
