‘If you don’t know where you’re going, you will probably end up somewhere else.’ – Laurence J. Peter

The above quote epitomises and investment journey without a plan. When it comes to building your plan, your life objectives can be taken into consideration when configuring your investment strategy, the design of the portfolio, and even the individual stocks. Investors often prioritise short-term returns above long-term goals by focusing on current trends. While many people begin with the best of intentions and set out to fulfil their financial goals, many end up failing horribly instead of ever reaching their goals.

Here are some habits which will hinder investors when they don’t have clear investment goals.

 

Failing to Plan 

‘If you fail to plan, you are planning to fail!’ – Benjamin Franklin

According to a recent University of Scranton study, 92% of people who fail to reach their goals do so because of their lack of planning. This isn’t necessarily all due to financial goals, but it sums up the need to plan for your finances. Individuals without a budget or financial planning are prone to making rash decisions, overspending, and impulsive purchases. Even when you’re making a lot of money, if you don’t plan, you won’t reach your goals.

Making a list will help you stay on course and prevent you from taking unnecessary actions. You will be aware of any unavoidable decisions you make that were not covered by the budget and lifetime cashflow planning and you can make decisions on how to handle them. The construction of a solid plan will help you understand accountability and highlight your deviations.

 

Unrealistic Goals 

‘Unrealistic expectations often lead to disappointment’ – Gary Hopkins

Goals which are too vague, too broad with and with no timeline are often the cause of unrealistic goals. Sit down with your financial advisor to discuss what is the most suitable financial goals. Setting unrealistic goals can lead to demotivation, and lack of consistency when it comes to regular savings.

In today’s world with social media, watching lavish spending from less well-educated peers ‘might’ steer you off course and could lead you astray. Set clear, realistic goals for the short-term and long-term with the help of a financial advisor who can give an unbiased perspective of your situation. Include small steps which can be practical to helping you achieve your goals.

 

Lacking Financial Literacy 

‘It’s not your salary that makes you rich; it’s your spending habits.’ – Charles A. Jaffe

Ignorance can be the greatest obstacle standing in the way of achieving your financial goals. Without a solid understanding of fundamental personal financial concepts, making informed decisions about money becomes an immense challenge.

Budgeting, saving, investing, and debt management are just a few of the key areas where lack of financial literacy can truly hinder your progress. When you don’t have a firm grasp on these critical skills, it becomes all too easy to fall into the trap of poor financial choices. These missteps can then snowball, undermining your ability to reach long-term objectives like homeownership, a comfortable retirement, or building lasting wealth.

The path to financial success has no single prescribed route. Rather, it’s a highly personalised journey made up of a unique combination of methods and incremental steps tailored to your individual circumstances. Accessing your customised roadmap requires a foundational knowledge base, and a financial advisor to help you along your journey.

 

Impatience 

‘The stock market is a device to transfer money from the impatient to the patient.’ – Warren Buffet

Most people are highly motivated and confident when they first start pursuing their financial goals, and they are determined to succeed. But eventually, they can run across unanticipated obstacles and other problems that make them impatient.

Impatient people alter their objectives, which makes it harder for them to succeed financially. Shlomo Benartzi, a behavioural economist, advises against using financial market mobile apps because those who do frequently make snap judgments in response to constant stock updates.

Achieving financial success is a lengthy journey. Ensure that you have a financial planner by your side. Establish small goals that you can accomplish more quickly. It will motivate you to keep going after your ultimate goals.

 

Resisting Change 

‘Change is inevitable. Growth is optional’ – John C. Maxwell

Change is never easy. People don’t like stepping out of their comfort zone. A great example of this is loss-aversion theory. Individuals perceive losses as more emotionally damaging than an equivalent gain. In other words, the pain of losing $100 is far greater than the happiness of gaining the same amount.

When someone must give up sentimental belongings or things, such as selling an heirloom or altering long-standing habits, it is a clear resistance to change. Although maintaining the status quo would make you more comfortable, it will prevent you from succeeding.

Maintaining the same habits will not help you reach new goals. Making certain compromises will be necessary for you to reach your financial goals. A good example for veering out of your comfort zone can be investing in the stock market.

 

Procrastination 

‘The best way to get started? Quit talking and start doing.’ – Walt Disney

Piers Steel, a professor of human resources and organizational dynamics, says his study found that 95% of people admit to procrastination some of the time. The millennials’ addiction to social media, phones, and other technology is likely to make them forget about financial planning. Postponing the day, you start saving or creating a financial plan is a major barrier to your financial success.

It is counterproductive to success to put off tasks that are necessary. After some time has passed, you’ll discover one day that you have not progressed. Every time you find yourself putting something off, make a decision to finish it right away. Take action to end your procrastination, and you’ll quickly form a productive habit. You’ll get closer to your financial objectives if you can overcome your procrastination. Speaking to a financial advisor can help you start your financial journey.

 

Creativity 

‘Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas’ – Paul Samuelson

This is very similar to resisting change. Repeating a task consistently in the same manner will not produce different results. People insist on doing things in their usual way yet expect spectacular outcomes. For as long as you reject change, or creativity avoidance or fear, this will keep you stagnant. If you aren’t achieving your financial goals, look for changes, try something new, open up to a financial advisor.

While everyone aspires to success, not everyone is prepared to make significant changes in their life. Creativity can mean a couple of things, such as stepping out of your comfort zone from only saving in deposit accounts to investing in the stock market. But be sure to ‘lack’ the creativity when it comes to your core portfolio. Have a plain-vanilla portfolio, which includes a globally diversified, low-cost mixture of stocks and bonds.