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How to Create a Goals-Based Investing Plan

By: Anders Velischek, CFP®

When you invest in public markets you inevitably find yourself riding the ups and downs of market swings. This is especially true when the markets are volatile like they have been recently.

Unfortunately, such volatility can take a toll on investors emotionally. The euphoria of market highs can quickly be replaced by the despair of market lows, leaving some investors feeling whiplashed by these conflicting emotions.

Benefits of Goals-Based Investing

One way to keep your emotions in check is to take a goals-based approach to investing. There are many benefits to approaching investing in this way:

  • You’ll have a roadmap you can refer to when you have questions about investment moves you should or shouldn’t make.
  • You can track your progress toward meeting your short-, medium- and long-term goals.
  • The investment process becomes simpler, more understandable, and more relatable.
  • You are better able to manage risk while generating an acceptable rate of return.
  • You’ll feel more confident making investment moves that might be obvious in hindsight but weren’t so obvious at the time.

And last but not least, you’ll sleep better at night!

Follow This Four Step Process

A goals-based approach to investing considers your current financial situation and where you want to go. Defining milestones or benchmarks in advance will help you monitor your progress along the way. Here is a four-step process for taking a goals-based approach to investing:

1. Set financial priorities and goals. View this in the context of your desired lifestyle, stage of life, family commitments, and charitable endeavors. For example, if you want to own property in Manhattan and a vacation home on the beach, this is going to require a different strategy than if you prefer the flexibility of renting.

Similarly, if you are starting a family, you’ll adopt a different strategy than if you and your spouse are empty nesters. And if you are philanthropic and want to support causes you’re passionate about, this should be factored into your investment plan. 

2. Determine your risk profile. This will be based on several different factors, starting with your capacity for risk. Capacity for risk is driven by quantitative factors like your time horizon, income needs, and liquidity needs. The further out your investing goal, the more risk you should be able to assume because you’ll have more time to make up potential short-term losses due to market volatility. If you’re in your 30s and investing for retirement, for example, you probably have a long-term time horizon and can assume more investing risk. 

There is of course a personal component which can be just as important. We call this your tolerance for risk. Some people are natural risk takers while others are more risk averse. 

Together your capacity for risk and your tolerance for risk make up your risk profile. 

3. Devise a concrete plan. With your goals and priorities in place and a good idea of your risk profile, you can now devise an investing plan designed to achieve your goals. The centerpiece of your plan is a well-diversified and efficient investment portfolio designed to smooth out returns and limit the impact of market volatility while minimizing your overall tax burden — including potential estate and gift taxes that could affect your beneficiaries.

4. Be prepared to revise your plan over time as necessary. Your family and financial situations are going to change over time, so your plan should be adaptable as well. Changes can result from sudden and unexpected life events or naturally from progressing from one life stage to the next. Examples of life events that might trigger you to revise your investment plan are marriage, the birth of a child, or a career shift.

One of the biggest shifts will be from the asset accumulation stage to the asset drawdown stage of life when you retire. Throughout your working life your main goal is to save and grow your assets, but when you retire, your goal will shift to drawing down and preserving your assets. This will require a big shift in your financial and investing plan.

How A Financial Advisor Can Help

A Simon Quick advisor can help you devise a goals-based investing plan that’s right for your particular situation. To learn more, call us at (973) 525-1000 or send an email to info@simonquickadvisors.com.

Anders Velischek, CFP®

Mr. Velischek joined Simon Quick in July of 2016. As a Vice President on the client advisory team, he provides financial planning advice for high-net-worth individuals and families. Additionally, Mr. Velischek works with a number of endowments and foundations, guiding them on investment policy decisions and investment implementation. Prior to joining the Client Advisory team Mr. Velischek spent six months in the Simon Quick Analyst Training Program.

 Mr. Velischek graduated from Bucknell University with a B.S.B.A in Accounting and Financial Management. At Bucknell, he was a computer technician, a Residential Adviser, a Peer Adviser of the Chi Phi Fraternity, and a teaching assistant for Management 101. Mr. Velischek was also an analyst in Bucknell’s Student Managed Investment Fund where he actively managed over $1.5 million of the university endowment. Mr. Velischek completed the Financial Planning Certificate Program at Fairleigh Dickinson University in September 2019 and became a CERTIFIED FINANCIAL PLANNER™ practitioner in December 2019.


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