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Do your investments match your financial goals?

Align your savings and investments with your goals to make the most of the money you're investing.

Tags: Goals, Investing, Planning, Retirement
Published: April 02, 2021

You have an idea of what you want out of your financial life: A new home, college for your kids, regular travel and a sound retirement. Does your investment strategy align with those goals?

Focusing on what you want to achieve can help you determine how to invest. Here are examples of goals-based investing in action, using some of the same strategies financial professionals use.

investments match your financial goals
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Goal: New home

For most people, a home is a big purchase. Knowing how much, and how long, you’ll need to save can help alleviate potential stress.

6%

The median down payment for first-time buyers.[1]

$340,000+

The median cost of a home in 2020.[2]

Certificates of deposit (CDs)

CDs are a low-risk choice to help you save for a medium-term financial goal. Also, since you might have more time to save, liquidity is less important.

             

Goal: College fund

College costs are rising. If you have kids, saving for college is an investment goal that requires some planning.

Average annual cost of tuition for a four-year public, in-state university: $10,560[3]

Average annual cost of tuition for a private college: $37,650[3]

15-20 years

Ideally, families kick off college saving when a child is born. This means a college fund is a fairly long-term investment.

529 plan

With a 529 Education Savings Plan you make contributions with after-tax income, and contributions are not taxed when withdrawn for any reason. Any growth in the account is tax deferred, and any gains earned are not taxed when withdrawn and used for qualified education expenses.  

 

Goal: Travel fund

Approach your next vacation with the same financial savviness you bring to any other goal by planning ahead.

$5,750

The average cost of a vacation for a family of four.[4]

12 months

Save for your vacation throughout the year—not just the month prior.

Savings account

A travel fund is a short-term goal, but you should still keep your savings separate from your checking account. Consider using a basic savings account. If you travel frequently, a credit card with travel-based rewards can help you maximize your budget.

 

Goal: Retirement

Investing prudently — and starting early — is key to retiring comfortably.

$50,220

Average annual budget of households over age 65.[5]

40 years

Retirement is the ultimate long-term savings and investment goal. Experts recommend starting as early as possible, then continuing to prioritize retirement as you age.

401(k) and Roth IRA

Start with an employer sponsored retirement account, like a 401(k), if you have access. Take full advantage of any employer match that may be offered as well as the tax advantage of contributing pre-tax dollars. If you’re already maxing out your employer-sponsored account or don't have access to one, consider opening a Roth IRA, which may provide you with additional investment choices.

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