Balancing your goals: How to manage your medium-term goals
It can be easy to overlook medium-term goals when reviewing your long-term plans. Yet, they’re often important for your wellbeing. Find out how you might manage your medium-term goals.
Last month, you read about how you might manage your wealth when working towards short-term goals. Now, read on to discover some options you might want to consider for medium-term goals.
Medium-term goals are often defined as those that occur within two to five years. They might include extensive travelling, buying a new car, paying for a wedding, or saving a deposit for a home.
Between your day-to-day budget and long-term goals, you might find it difficult to prioritise medium-term goals, even when they’re important to you. Making them part of your overall financial plan could help you give them the attention they deserve and highlight how to make the most of your money.
Investing in stocks and shares could expose your money to too much risk
While you’d be holding assets for medium-term goals longer than short-term ones, the time frame is still often too short for investing in stocks and shares to be appropriate.
The value of stocks and shares is often influenced by numerous factors, which could result in more volatility than is appropriate when you’re working towards a medium-term goal.
When you’re working towards medium-term goals, you might use the same strategies as when you’re saving for a short-term goal, such as a savings account or Cash ISA. But that doesn’t mean your only option is to leave money in a regular savings account. These two options may also be suitable and could help you reach your goals sooner.
Please note: The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
2 useful options that could help you reach medium-term goals
- Fixed-term Cash ISA
Cash ISAs are a tax-efficient way to save. The interest you earn from money held in a Cash ISA is not subject to tax, and this applies to fixed-term accounts too.
Typically, a fixed-term Cash ISA will offer a higher, guaranteed interest rate than a regular Cash ISA and could help you reach your savings goal more quickly.
However, your money will be locked away for a defined period, such as two or five years. Cash ISA providers must allow you to access your money, but withdrawing money from a fixed-term Cash ISA is likely to result in a heavy penalty. As a result, fixed-term Cash ISAs may not be suitable for short-term goals or an emergency fund.
Usually, fixed-rate Cash ISAs require you to deposit a lump sum within a short window when you open an account, such as 30 days. This type of account could be useful if you already have the money for a goal, but you don’t need to pay for it yet.
For example, if family members have gifted money for your wedding, you might choose a fixed-term Cash ISA with a term that aligns with when you’ll need to pay vendors. Or if you’ve saved money for a long trip when you retire in three years, you might move the money into a fixed-term Cash ISA that will mature before you leave.
In 2026/27, you can place up to £20,000 into ISAs, and you may deposit the full amount into Cash ISAs if you choose.
From April 2027, the total ISA allowance will remain at £20,000, but if you’re under 65, the amount you can place in Cash ISAs will be capped at £12,000.
Please note: An ISA is a medium- to long-term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
Tax concessions are not guaranteed and may change in the future. Tax free means the investor pays no tax.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
- Bonds
While investing in stocks and shares could expose you to too much investment risk if you have a medium-term goal, bonds might be an option you want to explore.
Governments or companies can use bonds to raise money, and you could use them as a form of fixed-income investment. As an investor, assuming the company or government doesn’t default, you’d receive regular interest payments during the term and the amount you initially paid when the bond matures.
You should note that while bonds don’t usually pose as much risk as stocks and shares do, there is still a chance that you could lose money. It’s important to review the risk associated with each investment opportunity and consider how it fits into your wider financial plan, which your financial planner could help you do.
Contact us
Please get in touch if you’d like to talk about how a financial plan could help you balance competing financial goals.
Next month, read our blog to discover how you might invest for long-term goals.
Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
An ISA is a medium- to long-term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
Tax concessions are not guaranteed and may change in the future. Tax free means the investor pays no tax.
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