How to Determine my Financial Objectives

The financial objectives are the foundation of finances and one would want to have them in every investment. Make a list of your objectives as a first step in the investment plan. Some possible objectives could include the following:
  • Accumulate an emergency fund in a 6 month term
  • Buy a car in 2 years
  • Save for the down payment of a house in a 5 year term
  • Finance university tuition in a 10 year term
  • Start a retirement fund in the next 25 years

Implement your objectives
All your goals have a deadline that will allow you determine how much will you need to finance each of these investments. After listing your objectives determine the amount of money you will need to carry on all these investments. Imagine you want to buy a car within a two year period that is worth $25,000.

Here are some savings options for you at 5% interest rate turnover.

  • In the first option, you must invest $22,675 which would be worth $25,000 in two years
  • In the second option, you must invest $12,195 at the end of each year to reach $25,000
  • In the third option, you must invest $11,614 at the beginning of  years 1 and 2 to reach $25,000.

You will notice the period of time and amount of money you need to finance your objectives give you a better understanding of how much you need to invest in each option.

Ask yourself the following questions to help you decide which objective should be carried on first.

  • Where will my money or savings go to?
  • What will I have to indebt to finance these objectives?
  • What would happen if I couldn’t carry on my objectives?
  • How can I increase my savings to help finance the objectives?

To answer these questions you should first quantify the amount of money you?ll need each year to finance your projects. Following an example in which you supposedly need to save in the first year $58,321 to get your investment program started.