Key Stock Portfolio Goals You Should Consider

Stock portfolio goals every investor should consider

Building, and then successfully managing, a portfolio of stocks is pretty much like running your own business.

Like a business, the ultimate objective of any stock portfolio is to deliver higher profits. In the case of your portfolio, those profits come in the form of better returns.

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However, getting to those returns requires you to achieve several key milestones along the way.

Understand your goals

In order for you to accomplish all of the interim steps required to accomplish your ultimate portfolio goals, you need to first understand some of those goals.

And once you know what types of goals need to be planned for, you can do a self assessment to see how they fit within your individual circumstances. Armed with that knowledge, you can then start constructing a portfolio of stocks that will accomplish those goals.

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Here are some important stock portfolio goals that you should aim to achieve. 

  • Blending in with the Bigger Picture: Before setting goals for your stock portfolio, you must realize that your stock portfolio is likely only part of your overall wealth asset mix, the others being (for those lucky enough to have them) your work pension, your home, and other fixed income vehicles (Bonds, CDs etc).  Make sure your stock portfolio goals are continually in-sync with (or complementing) the objectives you have in mind for the other investments.

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  • Retirement income goals: For those of us that may not be lucky enough to have a well funded work pension, our investments in stocks are probably going to be the prime source of retirement income. Before building your stock portfolio therefore, consider how that income goal is to be met: Will it be through regular dividends/distributions? Or will it be through sale of growth stocks in the portfolio (Capital Gains)? Or perhaps a combination of both?

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  • Funding near-term goals: Your portfolio management decisions to achieve retirement goals will be much different than those required to support near-term funding objectives. For instance, if you have a child/dependant that's going to need funding for educational pursuits within a short while, your portfolio building will require a different approach than that which you take to support retirement.

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  • Tax smart goals: For some of us, tax smart investing might be a major goal to consider when building a stock portfolio. This is true especially if you are already in a relatively high income tax bracket, and need to focus on reducing and deferring paying taxes until later. There are well known (IRS approved) ways to reduce your tax liabilities, such as building a portfolio within a tax sheltered account. But there are also other U.S government approved investment opportunities, such as investing in shares of "creative" structures like Limited Liability Companies, Flow-Through Shares or Off shore corporations available to more risk-aware investors. 

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  • Asset-mix goals: If you are an investor that believes in having a balanced set of investments, then one of the goals of your portfolio must be to deliver diversity. For instance, if you own your own home, plus a holiday cottage somewhere, as well as a time-share apartment elsewhere, then do you really need Real-estate Investment Trust (REIT's) stocks in your portfolio?  Yes, REIT's usually offer great prospects for ongoing income, but (given your circumstances) are they significantly aiding you achieve your portfolio goals?

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  • Liquidity goals: If you place money in a Money Market instrument, a CD or other term-deposit account, you'll likely be able to pull it out pretty quickly (though there may be an early redemption fee in some case). But the interest you receive might border on "negative returns". Stocks are definitely a viable option if you need liquidity. However, choosing the right stocks (heavily traded, highly liquid) to include in your portfolio is the only way to ensure your liquidity goals are met.

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Meeting your goals

While stock picking is "sexy" and exciting, building a stock portfolio without a clear set of goals is like starting to build a house without an architectural blueprint.

At the end of the day, what will help you structure the best portfolio of stocks to achieve your investment goals (which hopefully are in line with your portfolio goals!) will be a clear plan, set out before you start picking the first stock in your portfolio.


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And to meet those goals successfully, ask yourself the following questions to help you build your portfolio:

  • Why are you building the portfolio?
  • What is your investment time horizon?
  • How young/old are you (your portfolio goals will vary with your age)
  • How much risk are you willing to tolerate?
  • Do you have the knowledge to DIY (Do It Yourself)?
  • Do you need professional assistance?
  • Will your portfolio support your other investments?

Only once you have all of these answers can you truly construct a goal-oriented stock portfolio.