Planning and Setting Your Goals

More people spend more time planning their vacation than they do planning their financial future! When Investing, is like a long car trip. There’s a lot of planning that goes into it.
• How long is the trip? (What is your investing “time horizon”?)
• What should you pack? (What type of investments will you make?)
• How much gas will you need? (How much money will you need to reach your goals?)
• Will you need to stop along the way? (Do you have short-term financial needs?)
• How long do you plan on staying? (Will you need to live off the investment in later years?)
Running out of gas, stopping frequently to visit restrooms, and driving without sleep (this is the last of the travel analogy, we promise) can ruin your trip. So can saving too little money, investing erratically, or, worse yet, doing nothing at all.
You must answer the following questions before you can successfully set about your savings/investing journey:
• What are your goals? Is this money for retirement? A down payment on a house? Your child’s education? A second home? Income to live on in the proverbial Golden Years?
• How much money can you devote to a regular investing plan?
Don’t let yourself get away with fuzzy answers, either. In the end, investing is a lot of numbers. You need to get used to that, and quickly. As a matter of fact, it can be quite liberating. You can see exactly what you need to get to your destination, and can be accountable to yourself along the way. Ask yourself some more pointed questions:
• How much will college cost when my child needs to go?
• How much yearly income is reasonable for retirement?
• How much longer do I need to work?
Don’t worry … you don’t have to do all the math yourself. There are online interactive calculators that can help you figure your future money needs. The more specific you can be, the more likely you are to set and achieve reasonable goals.

After you have a rough idea of how much money you’ll need and how much time you have to get there, you can start to think about what investment vehicles might be right for you and what kind of returns you can reasonably expect.