How to set up financial goals

Discover financial goal setting and how it can impact your investments.

  • How asset allocation helps you invest
  • How your asset allocation ties to your portfolio risk level
  • Which free tools are available to help you set up and maintain your asset allocation plan
Asset allocation graphic on mobile

Understanding what asset allocation is and how it’s used can be essential when building towards your investment goals. After all, asset allocation can have a major impact on how your portfolio will perform over the short and long-term.

Like most things in investing, there’s no universal right way to do it—the better you understand asset allocation, the better you can determine which strategy best suits your unique goals.

How asset allocation helps you invest

Asset allocation is a part of every portfolio, whether or not it’s planned out. If you’ve got investments, then asset allocation is already playing a part in how those investments react to the market.

Asset allocation is the way you split your investment portfolio between higher risk/reward assets (like stocks and other equities) and lower-risk assets (like bonds and other types of fixed income).

How does that benefit you? The percentage you allocate to each, determines how risky your portfolio will be.

More fixed income = less change in your portfolio’s daily value but typically less overall gain over the long term (commonly known as more “conservative”).

More equities = more change in your portfolio’s daily value but typically a higher overall gain over the long term (commonly known as “growth” or“ aggressive”).

 Asset allocation graphic final

Where a portfolio falls on this spectrum will be different for everyone. How your portfolio is split will depend on how long you are investing for and how comfortable you are with swings in your portfolio. Generally, planning to stay in the market for a longer period of time will increase the amount of risk your portfolio can tolerate. And typically, the less comfortable you are with bigger changes, the more conservative your portfolio should be.

When the markets are uncertain, stocks tend to experience big swings due to major global events. In these cases, a more aggressive portfolio will be more prone to those swings on a daily basis. But remember, while the market will often enter periods of volatility, stocks and equities have historically produced greater returns in the long-term.

Want help setting up and managing your portfolio’s asset allocation?

There are a number of tools that can help you track your asset allocation, from basic spreadsheets to dedicated programs that link directly to your investment account. Passiv is one such tool that was developed to link with your Questrade account. It helps track your asset allocation by allowing you to set how much of each investment type you want allocated in your portfolio and keep track of it for you. If your portfolio strays from the allocation you set, it will send you a notification. And it will also notify you when you receive dividend income to reinvest.

Asset allocation is a part of everyone’s portfolio, but it’s not always a part of their strategy. To make sure that your investments suit your long-term goals, it’s important to be mindful of your portfolio’s asset allocation. Now is as good a time as any to look at your portfolio and spend some time figuring out what allocation mix is right for you.

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The information in this blog is for information purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.

  • How to set achievable goals & milestones
  • How to lay out a plan that can help you achieve them
  • Tricks to help keep you motivated and active
Family on the beach


You have your own unique set of financial goals. Some may be as small as meeting day-to-day obligations with a little extra left over for something fun, while other goals may be as grand as establishing a financial legacy that will someday be passed to your great-grandchildren. Big or small, your goals keep you motivated and focused.

However, your goals are unique, and that means there’s no one-size-fits-all solution to setting and achieving them. To help you figure out the path to your own investment goals, it’s essential to understand why goals are important, how to set them, how to lay out a plan to achieve those goals, and then finally take a look at common methods to keep you motivated and on-track.

Why clear goals are important

Clear goals are an important part of investing. After all, your goals are the reason why you’re investing in the first place. Defining your goals, whether short-term or long-term, can make it much easier to plan for and ultimately achieve them.

Laying the groundwork for clear, achievable goals

Before you plot a course to a destination, you need to know where you stand. When it comes to your investment-related goals, this means taking an honest self-assessment of your current finances.

Stick to a budget

This means knowing your income, and everywhere that money currently goes.
Figuring out these simple things can give you a great snapshot of where you stand, especially when it comes to finding hidden expenses that are draining your income and figuring out how much of your money you can designate towards your goals.

Once you’ve taken stock of your finances, you can start setting boundaries for yourself. It’s important to allow yourself some money to spend towards hobbies and activities, but a little discipline can go a long way when it comes to saving.

The 50/30/20 rule

It can often be helpful to think of your budget as a ratio. Many will quote Elizabeth Warren’s 50/30/20 rule which suggests that, in an ideal scenario, 50% of your income goes towards your needs, 30% towards your wants, and 20% towards your goals. Of course, not everyone can hit a 50/30/20 budget, but setting a ratio that works for you can help you budget some money towards your future goals without sacrificing your current wants.

Setting goals

There are many tricks and tools that can set you up for success. You don’t necessarily need to follow every single one of these suggestions—different methods work for different people. Below are some of the most common methods and considerations.

Make SMART goals

SMART is an acronym that is commonly used to increase your goals’ chances of success by setting realistic expectations and tracking your progress:

SMART graphic

Make sure that you set specific goals that matter to you, and that can be broken down into realistic, measurable milestones.

Prioritize high impact goals

One at a time, or all at once?

Is it better to pick off your goals one by one, or tackle them all together? The answer can be a bit tricky; sometimes it can make sense to knock a high-value goal off as quickly as possible (such as paying down high-interest debts). However, you can’t let your long-term vision get sidetracked by a thousand short-term goals.

Again, there is no one-size-fits-all solution; just make sure that you take all of your goals and obligations into consideration when you move forward to the next stage.

Planning for success

You know where you are. You know where you want to be. Now plot a course to get you from point A to point B. When you’re planning it all out, be sure to keep the following suggestions in mind.

Make sure that your plans match your timelines

While it’s important that your goals are achievable, you will need to do a little due diligence to make sure that your timelines are achievable as well. For example, having a goal to contribute a total of $60,000 into an account for the down payment on a new home might be achievable, but if your plan is to contribute only $10 per month, then it will take 500 years to reach that goal.

Fun fact: if you did contribute $10 per month into an account that accumulated an average of 6% annual interest, after 500 years you would have contributed $60,000, but the account would be worth about $3.5 trillion (adjusted for inflation) from the returns on those contributions thanks to the power of compound interest.

Automation is a powerful tool for achieving financial goals

Automating your investing means setting things up to automatically take care of some aspect of the process. A great example of this, and an excellent way to keep on top of your goals, is the pre-authorized deposit.

Use automation

Pre-authorized deposits treat your goals like obligations, essentially paying yourself first instead of leaving your own goals as an after-thought. This can be particularly helpful to those who have ever been tempted to dip into money they should be saving in order to fulfil an impulse-buy, or those who find it difficult to set money aside for their own long-term financial goals. To set up pre-authorized deposits, log in and go to Accounts > Funding.

Pre-authorized deposits are commonly used for retirement savings, particularly through workplace pension plans, but you can set up pre-authorized deposits for any account, of any type, helping you to save towards any goal.

Pick the right accounts for your specific goals

Don’t feel obligated to run all your goals out of the same account, especially if they’re on different timelines. Many accounts have a specialized purpose which makes them ideal for certain goals:

  • A Tax-Free Savings Account (TFSA) lets your investments grow tax-free, up to a fixed deposit limit, and can be accessed any time.
  • A Registered Retirement Savings Plan (RRSP)’s contributions can be claimed on your taxes for a rebate, and you don’t have to pay tax on these contributions until you retire (and are presumably in a lower tax bracket)
  • A Registered Educational Savings Plan (RESP) can help you save more for your child’s education through both tax-free growth and government contribution matching programs.
  • A margin account has no contribution limits, is taxed as capital gains (typically at only 50% your income tax rate), and will let you borrow against your holdings to invest even more if you wish.
Consider specialized accounts

In addition to the advantages of various account types, some find it beneficial to have unique accounts for specific goals. This can make it easier to keep track of where your contributions are going. It’s also possible to open joint accounts with a spouse, friends, or family members to pool resources towards shared goals.

Please note: if you’re using multiple registered accounts, be sure to keep track of your contribution allowances so you don’t unintentionally overcontribute. Also, your contribution allowance is listed by account type, not by account, so if you have two RRSPs and $5,000 of contribution room, it means that you are allowed to split that $5,000 between your RRSP accounts—not that you can contribute $5,000 to each.

You can check your remaining contribution room by logging into the CRA My Account system.

Tricks to keep you active & motivated

You have your goals laid out, your strategy in place, and your accounts are all open, funded, and active. Now all that’s left is to keep on top of your contributions and investments. However, that’s often easier said than done, especially with long-term goals. It’s easy to find yourself wrapped up in the hustle and bustle of daily life and fall behind on your investment plans.

These tricks can help keep you active in the pursuit of your goals, making sure they don’t fall by the wayside.

Follow an investing strategy

Log your goals in bite-sized chunks

One practice that can help is to keep a log of your goals and your progress towards them. This can help you to make sure that you don’t lose track of the details and milestones of your longer-term goals, while also helping you to organize your goals by deadline and priority.

A log can also be helpful in planning around setbacks. Remember: Unforeseen setbacks happen to everyone. There’s nothing wrong with putting off one goal to achieve something immediate and important. A log can help you to adjust your plans around these setbacks.

Use regular check-ups and reminders to keep your goals top-of-mind

Excitement is probably the best motivator, and staying excited about your goals can be as easy as doing regular check-ups.

These check-ups could be once a month, or even once a season. The important thing is that you’re making progress and celebrating victories when you find that you’re on track. The regular sense of accomplishment from meeting a goal or milestone can be a great motivator. Plus, it offers you a great excuse to treat yourself if you’re meeting all of your savings goals; a little positive reinforcement can give you that extra boost you need to reach that next milestone.

Check-ups also give you the opportunity to make some adjustments if you fall behind, if your financial situation changes (such as if you get a promotion that gives you more to contribute), or if your priorities shift (such as with the birth of a child).

If you’re checking up on a longer-term goal, make sure that you remember to track your milestones so that you can still celebrate victories along the way.

You don’t have to go it alone

A little social accountability can go a long way. One method of keeping on top of your goals is to find a small group of similar-minded people to share regular updates with, celebrating each other's successes and helping each other work through struggles. These could be through regular face-to-face chats, online video conferencing, or even a digital newsletter.

If you have a significant other, you can combine your efforts and work together towards common goals. Joint goals can be a great opportunity to keep each other motivated and on-track—just remember that there’s nothing wrong with having additional goals of your own, especially if you approach money and saving differently from your significant other.

There are a number of ways you can plan and pursue your investment goals. Regardless of which work best for you, you’ve already taken the most important step: you’ve taken the initiative to learn more. Now that the ball is rolling, you’re already further on your way to fulfilling your investment goals.

If you enjoyed this post, please consider sharing it on Facebook or Twitter!

P.S. We’d love to meet you on Twitter or on Facebook

The information in this blog is for information purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.

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