When it comes to investing, there can be several different ways to approach it, for example:
Broadly speaking, goals-based investing can often involve allocating investment assets that target a certain investment return to achieve a certain personal life goal, such as a comfortable retirement lifestyle.
In contrast, the traditional investing approach can often attempt to achieve the highest possible investment return for a given level of investment risk.
Importantly, while the goals-based approach focuses on articulating an individual’s specific financial goals and objectives, it still involves an assessment of an individual’s risk tolerance and capacity—as well as other important considerations when it comes to appropriate investment portfolio construction.
In this animation, we illustrate the above, and some of the other finer details of goals-based investing. For a more in-depth overview of the goals-based investing approach, please click here.