Do-It-Yourself Financial Plan Step#4 Financial Goals

Do-It-Yourself Financial Plan step #4 is goals. Now that you have a strong financial foundation we can build wealth according to your time frame, your return needs, and your risk tolerance. Notice I didn’t say the markets. That is an important point. Most of the market swings have nothing to do you but rather factors that are out of your control.

I had a friend that said he is so glad that he was in an all cash position during the crash because all of his friends lost money. After that he asked me how he can invest for better returns.

First of all no one loses money unless they sell. If you sell every time the market moves up or down- that’s gambling not investing. To invest for larger returns than what you can get in cash or bonds, you need to be a long term player. That means leaving it alone for 5 to 10 years. Are you up for that? (If not, that’s okay but you will need to stay in cash and accept low returns for the low risk you are taking.)

Great! Now let’s figure out how to invest by asking yourself these questions:

What am I investing for? (retirement, college, boat, first or second home,)

How long do I have to invest for this goal?  (10 years or 25 or what?)

How much risk am I will to take to reach this goal? (more risk means more volatility and more long term type investments)

How much money can I invest now and in the future to reach this goal? (What are you will to do to make your goals a reality?)

Am I willing to commit to this over the long term to achieve my goal? (Although goals can be modified, you still need to commit to meeting your target)

Investing is easy but answering the above questions is the hard part. But the answers above are an essential part of what you will need to be a successful investor. Why? Because if you don’t know what you are aiming for -you won’t hit it. If you don’t know what it will take to achieve your goal, you won’t contribute to it’s success.  If you don’t have a goal and just want the maximum return, you will surely lose your money.

My clients who know what they want, and how to get and are willing to do what it takes to achieve that are successful in accomplishing their financial goals. Are you?

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