Your savings plan must fit your goal, not the other way around

Never lose sight of reason you started putting money away

- By Mzwandile kaBizokwakhe

Research shows that most investors fail because they lose sight of the reason they put the money aside in the first place, not because they chose the wrong investment vehicle.

To cure this, the emerging approach is a shift towards goal-based investing to prioritise purpose over product to build lasting financial resilience.

The core principle is to define the outcome first, then determine the contributions required and the level of risk for the desired outcome for that time.

For example, if you have 10 years to invest, your strategy will be less aggressive than if you only have five.

In practice, this means mapping short-, medium-, and long-term horizons and setting a target rand amount for each.

“This makes the objective more tangible to stick to. This approach helps people move beyond the indecision that often comes with too many choices,” says Cassidy Nydahl, head of growth at Franc App, a goal-based platform for saving and investing.

“Once a goal has a time frame and a number, the asset mix follows naturally,” Nydahl said.