Holistic Investment Planning: Define Goals and Assess Net Worth
Estimated reading time: 5 minutes
Most investors jump into the market without understanding their purpose or financial position. This article explores the first two essential steps of holistic investment planning — defining your financial goals and assessing where you stand, to help you build a strong foundation for long-term wealth.
In today’s financial landscape, there are countless investment products available — from property and stocks to cryptocurrencies, ETFs, venture capital, and even alternative assets such as P2P lending or luxury collectibles. While this abundance of choice may seem empowering, it also increases the chances of making uninformed investment decisions.
Many investors start buying into these products without first understanding their purpose, personal risk appetite, or overall financial situation. As a result, they expose themselves to unnecessary risks and stress.
The goal of investing is not to chase the highest possible return but to protect and grow your purchasing power over time. In other words, investment planning is about beating inflation while managing risks wisely.
This is where holistic investment planning comes in. Instead of focusing purely on returns, it integrates your goals, behaviour, and financial position into a balanced strategy designed to grow your wealth sustainably.
Below are the first two steps in building a holistic investment plan.
Step 1: Define Your Financial Goals Clearly
When we drive to a new destination, the first thing we need to know is where we are going. Without a clear destination, even the best car and GPS cannot get us there efficiently. The same applies to your investment journey — you need to know what you are investing for.
Start by listing your financial goals. These may include:
- Saving for your dream home
- Building an emergency fund
- Preparing for your child’s education
- Planning for retirement
- Starting or expanding a business
For each goal, estimate the amount required and the time horizon to achieve it. For example, if you plan to buy a home in five years, you may need to prepare around 20% of the property price as a down payment and an additional RM100,000 for renovation costs.
By defining your goals clearly, you give direction and purpose to your investments. This helps you make better financial decisions and remain focused even when markets fluctuate.
Step 2: Know Your Net Worth and Set a Realistic ROI Target
Before you start optimizing your investments, you need to understand your current financial position. Begin by calculating your net worth — list all your assets (cash, investments, and properties) and subtract your liabilities (loans, debts, and credit obligations).
Next, identify all your investment assets and note their respective returns. Exclude your residential home from this calculation, as it is not a financial asset generating ongoing income or liquidity. Determine your overall return on investment (ROI) to establish a baseline. For instance, if your investments currently generate a 4% annual return, that’s your current performance benchmark.
Once you know your baseline ROI, set an optimal target ROI that aligns with your risk tolerance and investment behaviour.
For example, a moderate-risk investor might aim for 6–8% annually. The key is not to maximize returns at all costs but to achieve a consistent, sustainable performance that suits your financial personality and lifestyle.
Conclusion
Defining your financial goals and understanding your current financial position form the foundation of any successful investment plan. These steps give you clarity, structure, and purpose — ensuring that every investment decision you make brings you closer to your goals rather than further away from them.
In the next article, we’ll explore how to design, implement, and maintain an investment plan that aligns with your lifestyle and adapts to your life’s changing stages. Start your investment planning today by applying the first two steps above and stay tune for the second part.
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We’ll review your current financial situation and goals,
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