You want a home of your own, an education for your kids, a comfortable retirement someday and a little fun along the way. These are the dreams we all seem to be born with. To achieve them, we must become investors.
Investment goals tend to be long-term: enough to pay college tuition starting in ten years, for instance, or enough to retire on in 15 or 20 years. In fact, it's this long-range outlook that causes many people to set such vague, halfhearted goals that they fail to reach.
If you set merely "retirement" as a goal, what will motivate you to get there? Try going a few steps further: Where would you like to live when you retire? How much will it cost? What would you like to do? Travel? Sail the Caribbean? Play golf? How much income will you need in addition to your pension?
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
This kind of thinking lets you add some flesh to your bare-bones goal to "retire someday." You can set a goal like this: "Our goal is to retire at the age of 58 to a three-bedroom house near the Grand Canyon in Arizona, with room for the grandchildren who will come to visit. We want to spend at least two months of the year traveling in the U.S. and Europe, and we'll need $3,000 a month to supplement our pensions and Social Security." Now you've got some goals you can pin a price tag on and a nice mental picture to remind you of why you're pouring all that money into delayed gratification.
A Strategy to Reach Your Goals
Create your own strategy based on your own goals, risk tolerance, and psychological makeup. For example, three different investors might devise strategies like the following:
Sticking with stocks.
"Stocks offer the best returns over the long run. I have more than a decade to ride out any market dips, so I'm going to play the averages and put 90% of my money in the stock market. The rest I'll keep in savings, insured certificates of deposit, and money-market funds."
Rooted in real estate.
"I think that rental real estate, despite its occasional setbacks, offers the best chance of long-term gain and steady income. I'll try to keep 40% of my assets in real estate and diversify the rest, putting some in the money market for liquidity and some in big-company stocks to balance the risks in real estate."
Spreading the risks.
"I don't have a clue what's going on in the investment markets and I don't have the time to keep up, so I'll spread my money across a wide range of investments in the hope that gains in some categories will offset losses in others. I will invest 60% in stock-oriented mutual funds, 20% in corporate bonds, 10% in money-market funds and CDs, and 10% in shares of a real estate investment trust."
These are made-up scenarios, of course. Your own plan may look nothing like them, but you should go through the thought process so that investment decisions you make will be guided by your own strategy, not that of a broker or adviser trying to sell you something. A successful strategy can probably be summarized in three or four sentences, just like the ones above.
Monitor Your Investments
To make sure your investment plan is still on track, sit down once a year or so and update the values of what you own, including the equity in your home.
Compute each type of investment — stocks, bonds, mutual funds, and so forth — as a percentage of the total. If you haven't achieved an asset mix to your liking, this exercise will show you which parts have to be increased and which cut back. As the years go by, the percentage mix of your investments will change without you lifting a finger, as some parts of your portfolio rise in value and others fall. This makes a periodic review imperative. Money-management software, such as Microsoft Money or Quicken, makes it a snap.
-
The Most Popular Apps for Retirement Planning in 2025A J.D. Power survey ranks retirement planning apps based on customer service and satisfaction. Does your financial app make the cut?
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
-
Trump's Economic InterventionThe Kiplinger Letter What to Make of Washington's Increasingly Hands-On Approach to Big Business
-
AI Start-ups Are Rolling in CashThe Kiplinger Letter Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.
-
What is AI Worth to the Economy?The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
Kiplinger Special Report: Business Costs for 2026Economic Forecasts Fresh forecasts for 2026, to help you plan ahead and prepare a budget on a range of business costs, from Kiplinger's Letters team.
-
Trump-Era Regulations Will Broaden Access to CryptoThe Kiplinger Letter The president wants to make the U.S. the leader in digital assets.
-
Big Changes Are Ahead for Higher EdThe Kiplinger Letter A major reform of higher ed is underway. Colleges are bracing for abrupt change, financial headwinds and uncertainty.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
