Investment Objective

Before choosing investments, it helps to be clear about what the money is for. The investment objective guides every other decision, including which assets to hold, how much risk to accept and how long to stay invested.

Common objectives include capital growth, aiming to increase the value of investments over the long term; income, aiming to receive regular payments such as dividends or interest; capital preservation, aiming above all to avoid losses; and a balance of growth and income.

For example, a 30-year-old saving for retirement might choose long-term growth and accept large ups and downs along the way. A retired person relying on investments for living costs might prioritise steady income and lower volatility. Someone saving for a home deposit needed in two years would likely prioritise keeping the money safe.

Investment funds state their objectives in their documents, so investors can choose funds that match their own goals. Financial advisers also start by understanding a client's objectives, time horizon and tolerance for risk.