All personal investing is designed to achieve a goal, which may be tangible (a car, a house) or intangible (security, social status). Therefore, goals should be classified into various types based on the way investors approach them. Each investor has unique investment objectives that are affected by short and long term needs
Near- Term High Priority Goals
These are goals, which have a high emotional priority to the investor, and he wishes to achieve these goals within a few years at the most. For example: a new house. As a result; investment vehicles for these goals tend to be either in the forms equivalent to “cash or as fixed-income ‘instruments with maturity dates in correspondence with the goal dates. Because of the high emotional, importance these goals have, investor, especially the one with moderate means will not go for any other form of investment which involves more risk especially where, his goal is just in sight.
Long-Term High Priority Goals
For most people, this goal is an indication of: their need for financial independence at a point some, years ahead in the future. Eg: Financial independence at the time of retirement or starting a fund for the higher education of a three-year old child. Normally, we find that either because of personal preference or because the discounted present value is larger in relation to their resources, the time of realization for such goals is set around 60 years of age for people of moderate means. Because of the long-term nature of such goals, there is not a tendency to adopt more aggressive investment approaches except perhaps, in the last 5 to 10 years before retirement. Even then, investors usually prefer a diversified approach using different classes of assets.
Low Priority Goals
These goals are much lower down in the scale of priority and are not particularly painful achieved. For people with moderate to substantial wealth, these could range from a world tour to donating funds for charity. As a result investors often invest in speculative kinds of investment either for the fun of it or just to tryout some particular aspect of the investment process.
Entrepreneurial or Money Making goals
These goals pertain to individuals who want to maximize wealth and. who are not satisfied by the conventional saving and investing approach. These investors usually put all the spare money they have into stocks preferably of the company in which they are working/owing and leave it there until it reaches some level which either the individual believes is enough or is scared of losing what has been built-up over the years.. Even then the process of diversification and building up a conventional portfolio usually takes him a long time involving a series of opportunities and sales spread over many years.