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Goal Based Investing

There is a new buzz-phrase doing the wealth management rounds at the moment. And like most catch-phrases it comes with its own acronym, G-B-I for Goal Based Investing. One of the larger financial institutions penned a recent article hailing this as the ‘future of financial planning”.

That all sounds pretty exciting until you dig a little deeper. The concept, when spelt out in step form, sounds a lot like what most of us have been doing all along.

Goal Based Investing

Hmmmmm....not exactly splitting the atom type stuff but it does raise an important point.

If this needs to be sold as a ground breaking innovation are we as individuals failing to make the link between the money we earn and our life goals?

After all, money these days is mostly an electronic intangible to us, whether via our online bank statement or an investment portfolio valuation. Maybe that is why we fail to respect money and why we are often so poor at managing our finances effectively. Money itself has no value; it is what we can exchange it for that really holds value. If we do not identify and prioritise future goals that are important to us, we are in danger of simply dithering from one purchase to the next, spending frivolously and saving insufficiently, doomed to a life of asset poverty.

That is not a new or innovative concept – it is simply common sense.

However, if this ‘new innovative concept’ of Goal Based Investing helps people make the connection between their daily money management and their ability to ultimately reach their life aspirations, if it encourages them to create a plan, to have the discipline and patience to follow that plan and to ultimately achieve their specific goals for their lives then I should not just dismiss it as marketing hype.

While I do not accept that this is a new innovative approach to investing, I have taken the proverbial lens cleaner to the cynical-glasses I regularly don when reading the latest output from the big players marketing machines. I do accept that a GBI framework may be a clearer way of illustrating the story, of communicating in a way that connects people to their wealth and helps them to identify and prioritise the real purpose behind that wealth.

White Investments’ stated mission is “To make a difference”. This mission entails using our financial skills and knowledge to help clients realise their life goals through an effective and efficient investment management process.

Money is simply an enabler to achieving the things we prioritise in life – Money is not the end game. For a successful goals based approach to be implemented we need to identify specific goals to target and we need to be willing and able to prioritise those goals. A quote from James W. Frick captures this sentiment well:

“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you where they are.”

Each individual can and should measure the success of their investment strategy by whether they achieve their specific personal goals given a sufficient allocation of resources. It is in fact the individual who decides NOT to measure their investment success against a benchmark index, CPI or beating the Jones' next door.

For our part, we at White Investments will continue to follow our simple, cost effective and no-nonsense approach to providing investment solutions that are single-mindedly focused on achieving goals.

We want the opportunity to make a difference – it does not matter to us if we label it innovation or common sense.

If you have any questions or want further advice on how to structure your investments or improve your personal finances please contact us at info@whiteinvestments.co.za

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