What EXACTLY do you want to achieve from your INVESTMENTS?

Wanting to start investing is something common amongst MANY MANY youngsters nowadays, but where and how do we REALLY start? Which market do we invest in? What kind of investment products should we delve into?

AND MANY MANY MORE QUESTIONS FOR SURE...

If you had done some research online (on any platform, even TikTok) on where to start or what to invest in, but still have NO IDEA, no worries you aren't alone for sure!

Therefore, rather than writing another article that many had already written, for instance, on WHAT COMPANIES to invest in or HOW MUCH to invest when first starting out, let's talk more about what IS your ✨INVESTMENT GOAL✨

Depending on various factors, everybody has largely different goals on why they want to invest and how they want their investments to work out for them. You could be a 21-year-old undergraduate looking to retire at 40 and start your own cafe by then. You could be a 19-year-old NSF looking to 2x your capital in 6 months to 'open table' in the clubs (when it finally opens that is). You could be a 35-year-old office worker looking for passive income so that you can quit your not-as-fun office job and try something a little more exciting. Or you could just be like ME, who has NO IDEA what exactly I want yet.

FINDING YOUR OWN INVESTMENT GOAL

The first step to investing, at least for me, would be to figure out what's my goal because the goal would actually affect how much risk I have to undertake to meet my goal. Here's a quick example. Let's say my capital was $20k and assuming I need my profit in a year. My goal (Goal A) for my investment is to get a new Sony PS5 (about $1.1~), which works out to be about 5% of my capital.

On the other hand, what if instead, my goal (Goal B) is to 1.5x my capital so that I can travel to my favourite country and live like a king next holidays?

Compared with the 5% profit I have to make for Goal A, Goal B requires a good 50% profit (p.s. which is extremely hard unless you're trading). With this, I would have to employ different approaches to investing/trading in order to achieve what I want.

SO NOW WHAT?

After setting out a goal, you can essentially find out the risk that you have to take in order to achieve your goal. Take note, the TIME portion of your goal is extremely important too! A set goal of 20% profit over a year requires a whole different approach compared to a 20% profit over, say, 3 years!

Simply put, the more extreme your goal is, the more risks you have to take on, which means it COULD be more likely that you might make losses too!

But, what do I exactly mean when I talk about ✨RISKS✨? In terms of investing in my opinion, there are 3 main factors of risks:

1. Possibility of the company going bust

Basically, this sometimes includes the small-cap companies (google that if you're unsure what it means), but more often than not, companies that have been consistently making losses over past years.

2. Market conditions

This should be rather self-explanatory. Basically, the start of COVID-19 is one example where the general market isn't doing especially well, and this could be seen where the S&P 500 actually dipped 30% in early 2020. A good rule of thumb for me would be to take a look at indexes to determine the general market conditions.

3. Interest rates

Simply put, a higher interest rate just means that you have to repay more for the amount you borrowed. More often than not, this usually refers to the Fed's interest rates.

Definitely, there are many more risk factors, like internet hype (think r/wallstreetbets' GME), so DYODD PROPERLY before putting any real money in.

CONCLUSION

Personally, setting a goal is the most important part before investing because it definitely helps determine the amount of risk that has to be taken and whether the goal itself is realistic or not! In my next Opinion piece, I'll probably be talking about MY goal and how I craft my portfolio (HINT: it's in the REDS) to accomplish my goal!

Do let me know what you think and what's YOUR ✨GOAL✨!