Set your investment goals

Before you decide how to invest your money, you need to be clear about what you’re trying to achieve. 

Why are you investing?

Are you investing to achieve a specific goal (such as buying your first home or paying for your child’s education), or so you’ll have an income when you retire?

How much do you want to invest, and over what timeframe? 

The amount you have to invest (called ‘principal’ or ‘capital’) and when you want to use it, determine how much you need your money to grow and how quickly.

What’s your appetite for risk?

Typically, if you want high growth, you need to accept higher risk. If you’re not comfortable with the level of risk you need to take, you may have to invest more to reach your target. If you don’t want to invest more, or you can’t, you may need to reconsider your goal. Is your goal and timeframe realistic?

Learn more about risk.

When will you start investing? 

The sooner you start, the better your chances of meeting your goal. Time is growth’s best friend.

There may be a good reason why you can’t – or shouldn’t – start investing now. A big one is debt. The interest you pay on debt – for example a credit card or your mortgage – is often higher than you’re likely to receive from an investment. You have to pay for debt and it’s guaranteed to reduce the money you have, whereas in most cases, an investment is not guaranteed to grow.

Therefore, repaying debt before investing is usually a sensible option.