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What are your ambitions?
"The great danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark." – Michelangelo
It’s imperative to set goals in life. Meaningful goals can provide a strong sense of purpose that is a very important driving force. The more specific, achievable and timely the goal, the more effort you will put into achieving it and choosing the most appropriate tools to march towards your success!
Investing is a great tool to achieve a variety of goals: be it an early retirement, generating supplementary income or maybe realizing a dream of owning a beautiful red sports car (or a dozen, as Michelangelo would suggest). But for all of this to work, you need to have a clear plan and a strategy to achieve that goal.
With life lessons over, we’ll share some actionable advice in today’s newsletter! We will try to help answer the question: why should you invest? What do you want to achieve by investing?
By answering these questions yourself, you will be able to create an investment plan and maybe it’s not too long before you can start living in Bahamas or driving a new Ferrari to your 9am golf practice. All jokes aside, today you will find about the best practices for investing!
The most common goals of investing
Investment objectives are all based on the current and future financial circumstances and depend on income, the investor's age and future prospects.
Objectives are usually divided into 3 categories, which are framed by a period (term) and goal ambition:
- Short-term goals are usually to save faster for the purchase of a desired item, such as a trip or a car.
- Medium-term goals: to cover higher expenses when money is saved and invested over a longer period of time, such as buying a home, or investing for a child’s education.
- Long-term goals could be to achieve financial independence or to prepare for your elderly years by creating an additional source of passive income.
The importance of having a goal
Research has shown time and time again, that people who set specific and ambitious goals work harder than others who do not set goals or define them.
Goal definition is a crucial step towards its achievement that will help you keep your spirits high and maybe even exceed the initial expectations!
When setting your goals, we highly recommend to remember the acronym SMART that stands for:
- Specific
Your goal should be clear and specific, otherwise you won't be able to focus your efforts or feel truly motivated to achieve it.
- Measurable
You need to be able to accurately track your progress, so you can judge when a goal will be met.
- Attainable and Relevant
Of course, setting a goal that’s too ambitious will see you struggle to achieve it. This will sap at your motivation, both now and in the future.The goal you pick should be pertinent to your chosen field, or should benefit you directly.
- Time-Bound
Finally, setting a timeframe for your goal helps quantify it further, and helps keep your focus on track.
The most common goals of NORDSTREET investors
In our investing platform investors can pursue both short-term and long-term goals.
The majority of published projects usually last 12 months. For more long-term goal centered investors, they can always reinvest their earnings in new projects and enjoy compounding interest!
Investors tend to spread their investment amount across a couple of attractive investments in different risk levels. This process, called diversification essentially helps to reduce the risk of their investment portfolio. This is exactly the reason S&P 500 is called 500! It is a stock market index comprised of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. Since it combines 500 largest US companies in aggregate, this reduces the volatility and prevents one single company from wiping out investors life savings.
But even if you’re not keen on diversifying (although you most certainly should!) the functionality of the secondary market allows to sell your investments to other investors and recover the amount invested earlier than the expected maturity of the loan.
After talking to investors, here are the most common goals NORDSTREET investors are trying to achieve:
1. Financial independence
The majority of investors seek to create an additional source of passive income. Investors guided by this goal try to invest the maximum possible amount of available funds every month and intensively reinvest earnings.
2. Saving for retiring
With compounding interest being the 8th wonder of the world – said by no other than the great Albert Einstein himself, a lot of investors want to start planning for their retirement as early as possible. This group of investors is notorious for reinvesting all interest generated into new projects to get the maximum compounding effect.
It is no secret that you need to take care of your old age in your youth. This is usually referred to as an additional goal, and the monthly investment to achieve this goal depends on the age of the investor.
3. As a way to generate additional interest on their savings
Financial literacy is a rapidly growing concept. According to financial advisors, everyone should set aside at least 15% of income each month, and even better, protect the savings from inflation by investing!
4. Preparing a fund for children
Parents that invest for their children in Nordstreet set aside a portion of their income each month for their children's future. They also tend to use compounding interest and diversification to successfully grow their investments!
What’s your goal? We recommend to start moving towards it by investing in NORDSTREET projects – our team of specialists do the heavy lifting for you, so you don’t have to:
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