Know Your Goals. Why is this important for you?

Know Your GoalsMany people make this fundamental mistake when investing; They do not know what they want to get from their investment.

They do not have a clear reason for why they invest.

When asked about their reason for investing, many people say that they do not want their money to just sit in the bank and earn a meager interest.

But this is wrong! You should know what you want your money to do for you, not what you dont want it to do.

Why is this important? If you do not know what your goal is, you will just invest in any investment deals that come by and you will end up making decisions you regret.

Generally, there are two types of investment goals:

  1. Passive Income
  2. Capital Appreciation

Do you want Passive Income or Capital Appreciation?

Passive Income is income received on a regular basis, with little or no effort needed to maintain it. Examples of Passive Income Investments are REITS, Dividend stocks, Positive Cashflow properties. Investors normally go for Passive Income at the start of their investment journey to supplement or replace their working income. Passive Income is a mean to Financial Freedom as it can cover your expenses.

Capital Appreciation is when your investment has risen in value based on a rise in market prices. Examples of Capital Appreciation Investments are when you buy a stock or property hoping that it will rise in value and you can sell it. Investors normally go for Capital Appreciation when they have achieved Financial Freedom.

Personally, I am going for Passive Income now as it is my goal to attain Financial Freedom by the age of 30. I want to  be able to stop working and yet still maintain my lifestyle while not being tied down by any negatively-geared investments.

 

Advertisements
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s