Investing is a great way to build wealth and grow your money over time. But if you’re going to invest – ensuring that your investments align with your goals and values is essential.
That makes sense, right? After all, if you don’t have a strategy for what your investments will be used for down the road-then there’s no point in putting any money at risk!
This post will explain creating an asset allocation plan that aligns with your personal goals and values.
Identify your goals
The first step in aligning your investments with your goals & values is to identify the problem. If you don’t define the problem before starting a solution, it will be difficult to know whether your strategy has succeeded.
As a medical student, if you want to know how doctors invest their money, you must know what you want from your investments. You may save for retirement, put money away for college, or set aside funds for a significant purchase. It’s also helpful to consider how long you expect your investments to last (e.g., 5-10 years).
For example: if I asked my friend Bob what his goal was for fitness this year (and let’s say he wants to lose weight), I would ask him why he wants that goal – what does having less body fat mean for him?
What does being fit do for his life? Is there anything specific about his health or well-being that needs improvement? Once we’ve established some context around Bob’s goals, we can work together.
Identify your values
The first step in aligning your investments with your goals and values is identifying them. Your values are the most important things to you & should be something you can live with for the rest of your life. Values aren’t just about money – they include time, relationships, health, well-being, etc.
For example: if one of your core values is family time – and this includes spending time together as a family as well as taking care of them when needed – it would be hard for someone who doesn’t share this same value to set up an investment strategy that requires frequent travel or long hours away from home (or vice versa).
Create an asset allocation plan.
Asset allocation is dividing your portfolio into different types of investments. It’s important because it helps you achieve your goals and values, but it’s also something everyone should go through, not just investors.
Assets come in many forms: cash accounts, stocks and bonds (also called “securities”), real estate properties, or buildings – you name it! Each asset class has different characteristics that make them more or less appealing as part of an investment portfolio based on your needs.
Balance risk and reward
Investing aims to build wealth over time, but there are two sides to the coin: risk and reward. The more risk you take, the greater your potential return; however, if things go wrong and your investments lose value or even become worthless, your losses can also be significant.
If you don’t want to take risks and therefore don’t expect any rewards, then what’s left is simply preserving what you have already earned. This may sound like a reasonable approach for many people who don’t want their nest egg eroded by inflation over time (which is why many retirees choose not to touch their savings).
But this approach does not allow them access to other markets with better opportunities for growth and higher interest rates on cash deposits than they would earn in low-risk investments such as certificates of deposit (CDs).
Seek advice when necessary.
Seek advice from a financial advisor. A wealth of information can be found online and in books, but getting professional input is always a good idea. A certified financial planner (CFP) or another type of investment professional can help you align your investments with your goals and values.
If you don’t want to spend money on an advisor, seek advice from family members or friends who have experience investing their own money successfully over time. Your relatives may not know exactly what accounts are best for your situation.
Still, they will likely be able to give valuable insight into whether specific strategies would be appropriate for someone like yourself – and why those strategies might work well or poorly given where you’re at today, financially speaking!
There you go!
You’re an investor, not a gambler. Investing is about long-term growth and wealth accumulation, not short-term gains.
But there’s another essential element to consider: aligning your investments with your values and goals. By identifying what’s most important to you, you can ensure that every decision made in the stock market aligns with those values which means less stress and more peace of mind!
