If you want to buy something you can’t afford right now, you’ll have to save up. That’s the lesson you were taught back when you were still getting pocket money before your parents dropped you off at the mall. But saving alone only gets you so far. For those really big life goals – buying a house, going to see the Northern Lights for your 40th, paying your toddler’s university fees one day, or retiring – you’ll have to do more. You’ll have to invest.

While nothing is ever 100% certain when it comes to money, investing is a more effective way to build wealth and save towards major life expenses than putting your money into a savings account – or, even worse, stashing your spare randelas under the proverbial mattress. Savings accounts struggle to keep up with inflation over the long term. So, to make sure your money grows, you’ll need to invest it.

How to set your investment goals

Goal-setting is a crucial part of financial planning. You’re more likely to stay the course if you’re working towards something, as opposed to just saving or investing money for the sake of it, which will soon feel like you’re just … not spending it. When you earmark that money for something specific and important to you, you lower the temptation to dip into those funds.

You’ve probably heard about the SMART approach to goal-setting before (whether it was during matric finals or when you were trying to lose those five kilos before summer). This method helps you to set goals by qualifying them like this:

S = Specific. Get clear on what your goal is, for example, “a deposit on a house”.

M = Measurable. Do your research and work out the exact amount of money you’ll need.

A = Achievable. It’s a townhouse, not a beachside castle.

R = Relevant. Your goal should align with your values and the plan you have for your life.

T = Time-bound. When do you need this money?

Put it all together, and your SMART goal might look a little something like this: by 2028, I want to have R300 000 to put towards a deposit on a house worth R1.8 million in Randburg.

How long do you have before reaching your investment horizon?

First of all, what is an “investment horizon”? It’s the length of time you expect to keep your money in a particular investment. Knowing how long you have until you want to cash out will help you choose where to put your money.

Investing is typically a long-term exercise, because the magic of compounding interest really kicks in after a few years. So the “when” in your investment strategy will depend on how patient you are, and how long your goal allows you to wait.  

A short-term investment usually has an investment horizon of five to seven years (yes, even that is considered short in the investment world). A medium-term investment is anything from seven to 15 years. For long-term investments, you’re looking at 15 years or more.

What does this look like in real life? If you’re currently renting and your goal is to save up a deposit to buy a home of your own, that’s potentially a short-term goal. Looking down at your newborn and wondering how you’ll pay for their high-school education? That’s a medium-term goal. If you’re 30 and you’re investing towards your retirement, that’s a long-term goal.

Where to invest

No, we’re not going to tell you exactly where to put your money. It’s always best to speak to a financial advisor about your investment strategy. That’s because investing isn’t a one-size-fits-all situation. A financial advisor will consider your unique circumstances – including your income, expenses and objectives – and will determine the best investment solution for you.

They might tell you that your short-term investment goals are best served by a money market investment or a portfolio that’s relatively heavy on bonds (which generally offer high yields), and that your primary goal in the short term is to not lose money.

For a medium-term goal, they might say that you can handle a bit more volatility, and might suggest something like a diversified index fund portfolio. And for a long-term goal, like retirement, their advice might be to go with an aggressive allocation focused on the stock market.

For medium- and long-term investing, shares are an option. By buying and selling stock-market shares, you take control of your own financial destiny. Plus you get to call yourself a shareholder of Google, Amazon, Apple, Coca-Cola, Tesla or whichever other international brands you’ve invested in. You can buy shares in these companies and more through Shyft Shares, which allows you to invest in top US stocks and ETFs directly from your phone.  

In a nutshell

Whether you’re working with a financial advisor or not, Shyft Shares is the perfect tool for buying, selling and managing your shares in a huge selection of internationally listed companies. Some will offer a balance of short-term growth and volatility, while others are better suited to the long haul. Speak to an expert, do your own homework and invest SMARTly, and you’ll be hitting those investment goals before you know it.

Become a SMART investor in the next five minutes.