Investment strategy and objectives: Invest with a purpose

What is a good investment for one investor is not necessarily the same for another. If you have the right strategy from the outset, it becomes easier to achieve your investment goals.

Why do you save up?
The question may seem trivial. Yet it is a question that most investors would benefit from asking themselves.

When you first move into the investment market, it is the hope of getting your hard-earned money to breed, but when you need the money and how much you wish to profit, are crucial to how your investments should be placed.

If you for example wish to invest money that is intended for payment on an apartment in about a year's time, it is no good that the money has shrunk significantly by then. Here risk-neutral government bonds may be the right way to go. If you instead invest in the hope that one day your wealth has grown enough to finance a house in France, you can allow yourself to take an extra risk and thus hope for a higher return because the loss will not significantly lower your current and future living standards.

If you want success as an investor, you must have a clear investment strategy, which should at least cater for the expected return, risk profile and constraints such as time horizon.

Hard to measure investor abilities
Most investors would probably argue that their investment skills do not leave much to be desired. But how good an investor you really are can be difficult to measure. Experts advise investors to stay focused on their goals and not focus on the success stories, the media sometimes portrays.

You will never be able to choose the most successful investments. In hindsight, there will always be investments that have outperformed your own choices. Instead set realistic goals for return on your assets and be happy if you reach them. Compare your return on your funds in the category's market index, if you want an indication of whether the investment has beaten the market.

What is a good investment for one investor is not necessarily an opportunity for the other. Basically, you should consider how much your want your investment to grow, and if you choose the right investment strategy from the outset, it becomes easier to achieve the objectives.

• Have a clear objective for your investment: How much, when and what the money should be used for
• Do not be seduced by investment stories, set your own goals for success
• Do not despair if you do not choose the best investments, be happy if you reach your own goals