Jessica Moorhouse: Setting goals is key to any DIY investment strategy

Jessica Moorhouse is a millennial money expert, Accredited Financial Counsellor Canada®, award-winning blogger, and host of the Mo' Money Podcast. In this post sponsored by TD Direct Investing, she explains why there’s no point in talking about the 'how' of investing if you haven’t figured out the 'why.'


By Jessica Moorhouse
Sponsored by TD

Some of the most common questions I get whenever I run a workshop or webinar for new investors tend to be focused on how people should be investing their money. Questions like:

  • “Should I invest in stocks? ETFs? Mutual Funds?”
  • “What can I invest in to double my money?”
  • "What should I invest in … period?"

They’re all great and legitimate questions, but they're not necessarily the right starting point. In fact, there’s another question that needs to be answered before we can talk about where you should be investing your money.

And that question is: What’s your investment goal?

Investment planning starts with goal setting

I believe there’s no point in talking about the 'how' of investing if you haven’t figured out the 'why.' All too often, people aren't thinking about why they are investing their money.

But the reality is that your investment decisions will change depending on your investment goals. For example, you're going to make different investment decisions if you're investing to meet short-term goals (1-2 years), intermediate goals (2-5 years) or long-term goals (5+ years). Investing for retirement isn't the same as investing for a wedding or a down payment on a home.

Why you may not have thought about investment goals before now

Up until now, you may not have spent too much time thinking about goal setting and investing, and here’s why I think that is.

First, if you’ve traditionally worked with an advisor who manages your investment portfolio, you likely talked about your investment goals in your first few meetings with them, then they built you a portfolio to match those goals.

However, if that was the last time you discussed your investment goals, it might be time to talk to your advisor again (because investing goals, like life, don't stand still) or think about investing with someone else if your current advisor isn't the best fit for you.

Second, if you’ve been investing through a robo-advisor, you would have chosen your investment goals in the initial investor questionnaire you filled out when opening your account. And then, just like the investment advisor scenario, a portfolio would have been selected for you based on those goals and you’d start investing.

READ: Do-It-Yourself investing and taking control of your financial future

Some of the robo-advisors out there do a one-year anniversary goal check-in to see if anything’s changed, but you probably won’t ever get an email or call to see how you’re doing. It’s up to you to keep track of your progress.

Lastly, if you’re a DIY investor, you may have completely missed this step of figuring out your goals before you started investing. I actually see this a lot. Many people get excited about building their own couch potato portfolio based on some models they found online, then they start investing through a discount brokerage, but they miss a very important step in investment planning: goal setting.

How to keep on track when DIY investing

First and foremost, if you’re new to the world of DIY investing, that’s okay! There are many great resources out there to help you (one of my personal favourites is John Robertson’s book The Value of Simple), but in general it means you’re the one picking your investments and in control of your portfolio. It gives you much more flexibility and freedom with your investments, not to mention some significant savings in fees.

Traditionally, DIY investing was only a thing for the experienced investor. There’s a lot to know and a lot of responsibility involved in being your own investment manager, but investment services like TD Direct Investing are trying to make it simpler and more accessible. TD Direct Investing is always looking to help its investors by providing educational information and tools to help make investing easier.

GoalAssist is a free interactive investment planning tool within the TD discount brokerage platform, WebBroker. It helps you set investment goals with specific timelines, test out different scenarios to see how they impact your ability to reach those goals, and allows you to watch and monitor your real-time progress towards your goals.

It also allows you to set up a number of different goals with different time horizons and investor profiles, while still keeping everything organized in one place.

How to get started

No matter if you’re a beginner who has finally saved up enough to start investing, or you’ve been investing for decades but want to become more hands on with your investments, it's important to take some time to step back and reflect on your “why.”

If you’re a long-time investor, it’s easy to lose sight of your goals. And if you’re a new investor, the whole process can seem overwhelming.

So take a moment and clearly outline all of your investment goals. These goals will serve as your compass, which you can refer back to over the course of your journey to make sure you're on the right course for you.

Sponsored by TD