Asking yourself this simple question is one of the most important things that a prospective investor has to do. When you invest, you need to know perfectly why you are doing it. The question may sound a bit foolish but ask yourself what are the precise reasons you are investing? What are your goals and objectives? Of course, most people will simply respond something like "I invest because I want my money to grow". There is nothing wrong with that, but this type of answers lacks the highly needed details. Of course everyone (or let say almost everyone to be accurate) wants to get richer so it does not really add any value to state that. What you need to do however is to determine clearly what your objectives are. For instance, this could be reaching a million dollars in ten years’ time. This could also be having enough money to retire in 15 years’ time. Every person will have different objectives. Once you have clearly identified these objectives the next steps is to first make sure that these objectives are reasonable and second, assuming of course that they are, determine how you are going to reach these goals. What are basic investment objectives? There fall into two big categories: Income and Capital growth. And it’s important to remember one thing: “Most investors, even the most conservative-minded ones, want some level of income generation in their portfolios, even if it is just to keep up with the economy's rate of inflation”.
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