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INVESTMENT OBJECTIVES In order to develop your Personal Investment Program, it is important to establish long-term goals and objectives to provide direction for future developments and desires. However, the first step in establishing your goals is to analyze your current financial condition. This can be accomplished by preparing Personal Financial Statements and a cash flow analysis. In addition, any planning should also include cash reserves for emergencies and insurance coverage. Once your current financial condition has been evaluated, the second step is to establish broad investment objectives. There are essentially three primary investment goals:
The establishment of investment objectives helps determine the degree of emphasis placed on each of these goals. Carefully examine your standard of living, resources and family needs and then realistically decide which investment goal best fits your needs. Short-term sacrifices may be necessary to provide for a comfortable future, and realizing this fact ten or twenty years too late may make important financial and life goals unattainable. For example, children who wish to attend college might be unable to do so if their parents did not budget and plan ahead for tuition and expenses. Today, one can expect to have to save a substantial amount each year for several years to finance a college education. Many people have also not taken the time to plan for retirement. This goal may conflict with their goals to provide education funding for children. An improper plan can result in people reaching retirement but having to cut their standard of living. Setting goals and objectives early enough will help to achieve financial security. Financial goals and objectives are of further value because they can help people weather financial emergencies that may occur. In contrast, people who do not set long-term goals and objectives can become victims of circumstance. There are many investments to choose from to help your toward your financial security. Many assets, including stocks, bonds, real estate and other investments can help fulfill investment objectives, whether it is growth or income. However, before investing, it is necessary to analyze your liquidity requirements as well as tax consequences for the upcoming year. This may alter the timing of investments or the decision with regard to investment selection. Once you have determined your investment goals, an appropriate asset allocation should be chosen. Your asset allocation should reflect your expectations for investment return. There are several investment objectives that can help you plan an investment strategy. The outline below gives simple guidelines for an asset allocation mix.
DESCRIPTIONS OF INVESTMENT OBJECTIVES MAXIMUM SAFETY - Appropriate for individuals who require a high level of current income where the principal must be kept intact for some specific use in a relatively short time. This category is not favored as a long-term objective because it lacks protection against inflation. MAXIMUM INCOME - Appropriate for individuals who require the highest level of current income where the principal must be kept intact over time. This category is not favored as a long-term objective because it lacks protection against inflation. MODERATE INCOME - Appropriate for individuals who require substantial income for ten years or more, while at the same time requiring protection against inflation. BALANCED INCOME - Designed for individuals who require both income and principal to sufficiently keep pace with inflation while generating as much income as possible. BALANCED GROWTH - Designed for individuals who require growth in both income and principal to sufficiently keep pace with inflation while generating above average appreciation of principal. MODERATE GROWTH - Appropriate for individuals who currently depend on a small degree on their portfolios to provide current income and would prefer to have appreciation of principal. MAXIMUM GROWTH - Designed for individuals who have little or no concern for current income and whose investment interests often transcend pure financial considerations. These individuals are willing to assume a greater degree of risk, and understand both the positive and negative consequences of aggressive investments. It is impossible to plan for every contingency, so the essential element is flexibility. Whatever your investment strategy, review your long-term goals and objectives every year to be certain that your objectives and investment attitudes are still aligned with your investments. |
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Securities offered through Sigma Financial Corporation. A registered broker/dealer. Member FINRA & SIPC.Planning Services offered through Sigma Planning Corporation, a registered investment advisor.Any information contained on this site does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser licensed in your state. We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals. IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. Asset allocation, diversification and rebalancing do not assure a profit or protect against loss in declining markets. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Past performance is no guarantee of future results. Investment products, insurance and annuity products:
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