Lighthouse : Identifying your investment goals

What do you want your wealth to achieve for you? Most of us will have a variety of financial goals aimed to help us at different points in our lives. Having a strategy which takes these goals as a starting point, allows you to save more effectively and should help take the worry out of your money management.

Are your goals achievable?

Rather than simply viewing investing as getting the best possible return on your money at an unspecified date, goal-based investing aims to help people meet their personal and lifestyle aims, whatever they may be, in a straightforward and simple way. It helps you to see your investment journey more clearly, from buying a home to retirement, allowing you to identify the necessary steps and to understand how much you need to save to achieve them.

Thinking short-term and long-term

In order to adopt this approach, you need to think both short and long-term. Here are some examples of the goals that will typically feature in a lifetime plan:

• As a short-term goal, younger people are likely to want to save for a deposit to buy a home. This might include products offering the best interest rate, with the lowest risk, such as the Help-to-Buy ISA, or a cash version of the Lifetime ISA, both of which attract a 25% bonus from the government.

• Starting a family might be the next expense and for this you may want to look at medium-term investments such as five-year bonds and seek out products which suit in terms of interest rate and ease of access.

• An emergency fund can be needed at any time of your life and the requirement for immediate access makes traditional savings accounts or interest-paying current accounts an option.

• It is never too early to start saving for your retirement and this is where the products you choose can become more complex. There are many ways to save, not least of which is your pension and the government-introduced auto-enrolment pension has helped many people into a workplace pension for the first time. But this should only be the start of your plan, you may want to think about additional saving into a pension scheme, specialist investments, or buy-to-let property. You will need to think how these investments are structured and what amount of risk you are prepared to accept - you may want your pension fund in safer investments in later years as protection from short-term volatility. There are many options and the route you take can have a significant impact on the quality of your retirement years.

• Raising a family is a long and expensive journey and investing in fixed-term bonds can provide lumps of cash at appropriate points along the way. You may want to take advantage of your £20,000 per year tax-free ISA allowance or invest in a buy-to-let property which could double-up as accommodation for your child while at university.

• If you're a parent, you will want to look at how to manage Inheritance Tax to allow your children to inherit as much as possible from you.

Working with an adviser

This may all seem complex, but with the help of a financial adviser it can start to make a lot of sense. Being clear about your goals and the time horizons in which you want to achieve them, is the first step in the process. By gathering this personal information, a financial adviser can help you define the right level of savings, your attitude to risk and the most appropriate mix of funds to meet each of your needs, while providing a rational and disciplined investment approach to help you through market volatility. Your goals are likely to change over time, so it makes sense to have regular reviews of your investments to ensure they continue to meet your needs.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.