Do investors achieve more by setting life goals?

Early retirement and greater financial security are top priorities

Some 80% of consumers believe having a goal in mind when investing and tracking the progress can lead to more successful outcomes, research by Bestinvest found

Of the 2,000 UK adults surveyed by the DIY platform, the vast majority (89%) of those holding assets used a goal while investing.

For most (77%), this was either retiring early or being able to fund a more comfortable retirement alongside their state pension.

Other goals included greater financial security (40%); boosting lifestyle ahead of retirement (26%); paying for future costs such as weddings, holidays, school or university fees (23%), and building up wealth to pass on to the next generation (20%).

Alice Haine, personal finance analyst at Bestinvest, said: “It’s great to see that people are pairing their investment strategies with their life goals, as a number of academic studies have also found that individuals with clear goals are significantly more likely to do better financially than those who do not.”


Engagement

Surprisingly, 39% of people polled did not hold any investments at all, while 40% said they don’t regularly check how their assets are performing or even consider changing allocation.

Bestinvest also discovered a significant gender imbalance. While both men and women strongly believe that having a goal in mind helps getting better result, women are noticeably less likely to check if they’re on track to achieving their desired outcomes – with 57% of them keeping track compared with 72% of men.

A similar trend is also true according to age, as people over the age of 45 are less likely to check the performance of their investments – a critical time since many may be retiring soon.

Haine added: “It’s concerning that female investors and older generations are choosing to pay less attention to their investments than their younger counterparts. Women are more often vulnerable to pension poverty as they have less money squirrelled away than men either because of the gender pay gap or because they have taken time out of their careers to care for children or loved ones.

“Therefore, it is key that they get their money working harder for them to secure a better future.

“For older investors, monitoring their money and investments is also imperative as they need to make sure they are not only diversifying their portfolio in the most tax-efficient way in the run-up to retirement and post-retirement, but also have enough set aside to cover all their financial needs once they stop working.”

Source: IA