Setting the priorities right - how to think about GBI
Unlike traditional wealth advisory solutions, our GBI platform requires you to think not only about what you want to achieve with your investments, but also about how it would affect your financial and personal well-being if your goal is not met.
"Indispensable" goals
Failing to reach has strong consequences
"Luxury" goals
Failing to reach has no consequences
Investment target closer to starting capital
Investment target distant to starting capital
Requires less risky strategies
Allows higher risk strategies
Each goal is shown as a jar and each jar is of different size, depending on the importance of achieving your goal. Larger jars illustrate important goals - i.e. goals that need a high success rate. Such goals require more attention and dedication in terms of capital or regular contributions. They demand less risky strategies, while "nice to have" goals can start with relatively less capital and allow for more investment risk.
Demands less risky strategies
Indispensable goals
Failing to reach has strong consequences
Investment target and starting capital are not too distant to each other
or: goal requires higher regular contributions
Allows more risky strategies
Luxury goals
Failing to reach has no consequences
Investment target and starting capital are more distant to each other
or: goal requires less regular contributions
Some concrete examples
commonly observed goals
You need to know what you want to achieve with your investments by when and prioritize how necessary each goal is for you. The prioritization is of particular importance since it will determine how risky your investment should be.
Asked simple: how does not reaching your goal affect your wellbeing?
Necessity / Priority / Impact
Getting your investment priorities right is essential to our goal-based investing approach. Despite the tendency to consider all goals as important clearly some are more important than others. Judging on the necessity of reaching a goal by analyzing its impact on your financial wellbeing is a useful method setting priorities right.
Always keep in mind that goals with high necessity and impact require strategies that allow for less risk-taking, which limits the ability to participate in capital markets. You must therefore always try to carefully balance your investment ambitions with the importance of achieving your financial goals.
