It is always beneficial to set objectives in life, whether they are personal goals such as being more active, spending quality time with friends and family regularly, or perhaps trying to progress up the career ladder.
When it comes to savings and investment planning, your mindset for setting objectives should be no different. So, let’s take a look at how you can set short-term, medium-term, and long-term money goals to put you on the path to financial freedom.
Short Term Savings
When it comes to short-term objectives, we would define this as anything within the next 5 years. This could be a goal to get on the property ladder as a first-time buyer or complete home upgrades, like installing a new bathroom. Perhaps it could be upgrading your car to a newer model or taking a bigger family holiday to celebrate a special occasion, such as a 30th or 40th birthday.
Whatever your short-term objective may be, it is always worth considering where to save this money. For first-time buyers, there are great government incentives, including the Lifetime ISA, which our colleague Andrew McRae has recently discussed in his article, ‘Is a LISA right for you?’.
If the short-term objective is not directly linked to buying a property, there are a host of cash-saving options, like Cash ISAs, which are great for building tax-efficient capital. If you plan on really knuckling down and saving over £20,000 in a single tax year, or you would like to have a Joint Savings Account with your partner, then a standard Savings Account is a great place to begin.
Easy Access Savers enable you to contribute regularly, making them ideal for individuals who are starting to save on a consistent basis. More importantly, they allow you to make withdrawals at any time without any penalties. The trade-off for this increased flexibility will generally be a lower interest rate in return.
For savers who like to make one-off larger contributions and are happy to not have access to the funds for 12 months at a time, providers can offer fixed-term deposits, which will offer you a better rate, but the money is effectively locked away until the term deposit matures.
Medium Term Savings
Moving to medium-term objectives, we would classify these goals as anything you want to accomplish beyond 5 years from now, i.e., a goal that is longer-term but not quite retirement planning.
Perhaps, moving to a bigger property, saving money for children, or any other type of ad-hoc larger expense. In these cases, making use of a Stocks & Shares ISA could be the best option, as it gives your money an opportunity to grow beyond what you would reasonably receive in terms of an interest rate from your bank.
Long Term Savings
Finally, those longer-term objectives usually include saving for retirement and building up pots of money that can fund your life once you step away from work.
Pensions will always be a great place to start, and they are extremely tax-efficient, especially for employees who can utilise salary sacrifice and increase their contributions as they progress in their careers and rise up the earnings ladder.
Beyond your pension/s, it may be that you have multiple investment vehicles for your retirement, like Cash Savings, Stocks & Shares, or ISAs, which are all working away to make sure your life after work remains affordable and comfortable.
Your First Steps
Reaching your financial goals starts with clarity. Taking the time to define your goals is the first and most important step, whether that’s buying a home, building a retirement fund, or saving for a special occasion.
Once you know the destination, partnering with a qualified Financial Planner can help you map out the path to get there with confidence and purpose. So, if you’re ready to begin, get in touch and take your next steps toward turning your goals into reality.
The information provided is intended for information only and should not be regarded as advice.
SpringGen Advice Ltd, 928966, is an appointed representative of Acumen Financial Planning Ltd, which is authorised and regulated by the FCA, FRN 218745.
