The answer to the question “Why invest?” may seem obvious: “To make money!” But knowing or at least having a sense of what your goals are (or what financial outcome you want to achieve) is important to help determine which investments are right for you. This will help you quickly narrow down your choices and focus your investment decisions. A measureable goal will also give you clarity on how close you are to achieving it.
Setting a goal starts with understanding why you are interested in investing. There are as many individual goals as there are investors, but for those of us just starting to think about it, here are the most straightforward and common ones:
If you are more interested in having the value of your investments grow quickly without needing any cash payouts, then you are more like a Growth Investor.
On the other hand, if you want or are depending on income payouts from your investments, then you are an Income Investor.
What is growth and income investor
The 2 investment goals and styles are not mutually exclusive, and your preferences can change over time too. You may even have both goals, but perhaps for different reasons (eg. Growth for increasing the value of your savings for the down-payment for a car in a year; and Income to help supplement regular expenses like tuition, rent, or just that quarterly holiday trips). All you have to do is to break up your investments into 2 portfolios for each goal, and invest accordingly.