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Goals-based investing solutions

Goals-based investing places your goals at the centre of the investment process and aims to build investment products that do the same.

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What is goals-based investing?

Goals-based investing is an approach which aims to help people meet their personal and lifestyle goals, whatever they may be, in a straight forward and simple way. 
 
Just as you may have different bank accounts for different purposes such as a savings account or a holiday account, it makes sense that you have different investments aimed at meeting different goals. For example, ensuring you have enough income to live off in retirement, ensuring your money grows so that you can afford to take regular holidays or leaving some money for your children or grandchildren. Once your goals are identified you can then look to investment solutions that are targeted at meeting those particular goals.
 
A goals-based approach to investing is beneficial to investors because it puts them in the driver’s seat as they are actively involved in the decision making process. Success is not about outperforming benchmarks or competitors – it’s measured by how well an investor’s portfolio is tracking against a stated goal.


 

How is it different?

The goals-based approach represents a real shift in the way financial advice is given
and the way investment solutions are designed, turning the traditional approach on its head.
 
However, it is important to note that the principles of diversification and risk management
are still an important part of the portfolio construction process.

The traditional approach

  • Theoretical and quite complex
  • Solely focused on an individual’s risk profile, rather than what they want to achieve
  • An individual is invested in a pre-packaged investment solution that best matches their risk profile

The goals-based approach

  • Starts with understanding current and future liabilities, then constructing a portfolio that aims to achieve financial goals using a mental accounting framework
  • Focuses more on total return outcomes or specific goals such as generating a reliable income stream
  • Risk isn’t viewed as outperforming or under performing a benchmark, it’s about will I fall short of my goals? What do I need to do to ensure I am on track to meet my goals?

The research behind behavioural economics

Professor Daniel Kahneman won the Nobel Prize for Economics based on his work in the area of behavioural finance - how investors actually think and behave, rather than how financial theories and theorists suggest they should behave.

Behavioural economics relaxes the assumption that investors and markets are always rational, and the work of Kahneman and others helped form the basis for a new approach that is focused more on achieving investors’ specific financial goals.

The three broad categories

The goals-based approach is based on Abraham Maslow’s hierarchy of human needs theory, with three ‘buckets’ of goals fitting together in a similar way. Although investors may have very different goals depending on what life stage they are at, their goals can be broadly categorised into essential needs, lifestyle wants and legacy aspirations.

The most important and fundamental needs are at the base as they need to be met first, and the aspirational goals are towards the top.

Latest videos

Global Multi-Asset Fund profile

2017 FundSource Awards winner - Alternatives Sector category 

Greg Fleming, Head of Investment Strategy, introduces the Fund and what it is aiming to achieve for investors. Oliver Trusler, Investment Director at Schroders, and Matthew Hopkins, Portfolio Manager, also discuss the different investment approaches taken by the underlying funds.

A beginners guide to goals-based investing

Jeff Rogers, AMP Capital’s goals-based ambassador, explains why it is important to have a very clear understanding of an investor’s personal and financial goals before designing and managing an investment strategy.

Income Generator Fund profile

Greg Fleming, Head of Investment Strategy, provides an overview of the Income Generator Fund. This innovative goals-based solution aims to provide a regular and stable income combined with the potential for long-term capital growth. 

How to get started and prioritise your goals

Jeff Rogers explains why investors often find it daunting to think about their goals, how prioritising your needs and wants is a good place to start, and the benefits of a goals-based investing strategy.

Goals-based solutions

Income Generator Fund

A diversified fund which aims to generate reliable, stable and growing income with capital growth over time. Current annual fixed payout of 5.0% (gross)1.


1Current pay-out is fixed to 31 March 2018. Fixed pay-out resets annually on 1 April.


Find out more

Global Multi-Asset Fund

A diversified fund targeting a gross return of 5.25% pa above inflation on a rolling five year basis. Actively responds to changing market conditions with a flexible approach to investing.

2Fund Manager of the Year Awards are announced by FundSource, the investment strategy and research company. These awards should not be read as a recommendation by FundSource. For further advice on the relevance of this award to your personal situation consult your authorised financial adviser, or visit www.fundsource.co.nz.

Find out more

Supporting material

AMP Capital Income Generator Fund flyer

A two page overview covering how the Fund works, the benefits for investors and key product information.

Read more

AMP Capital Global Multi-Asset Fund flyer

A two page overview covering how the Fund works, the benefits for investors and key product information.

Read more

How to invest

Read the Product Disclosure Statement.

1

Individual investors

Contact your financial adviser about investing in AMP Capital funds. Advisers can access our products through a number of platforms and wrap services.

Or, you can invest with us direct online:

Invest online PDS
2

Advisors

To find out more...

Read the application form Contact a business development manager

Or call us on 0800 400 499

3

Institutional Investors

To invest, call us on 0800 400 499 or

Contact your relationship manager





Product Disclosure Statements (PDSs) dated 4 August 2017 for the offer of the AMP Capital Investment Funds have been lodged with the Registrar of Financial Service Providers. The PDS documents can be obtained from our website and from the Disclose website www.business.govt.nz/disclose. Nothing on this page is financial advice for the purposes of the Financial Advisers Act 2008 and any associated regulations. You can seek advice from a financial advisor to help you make an investment decision. The Manager and the Issuer of the Fund is AMP Investment Management (NZ) Limited, Ground Floor, 113 - 119 The Terrace, Wellington.