How To Set Realistic Investment Goals

Why do you invest? Really? If you say to make a lot of money, well, how much is a lot of money? And when you get ‘a lot’ what are you going to do with it? Many lottery winners have been reported to be on the verge of bankruptcy not more than one year after winning ‘a lot’ of money. Many invest in the wrong things. The problem is not having a plan, not having proper goals.

Your investment advisor can guide you to long term wealth creation, but the operative word is guide. They are simply a resource tool to help you reach where you want to go – to help you set realistic investment goals. Lets take a look at some of the questions investors should think about when deciding how to invest their funds – with the help of their financial advisor.

Investment Policy Statement

1. What are the real risks involved, especially in the short run?

2. What are the most likely emotional responses I will have if my investment loses value?

3. How knowledgeable am I about investments and the markets in general?

4. What other capital or income sources do I have?

5. How important is this particular investment to my overall financial position?

6. What, if any, legal or regulatory restrictions affect my investment needs?

7. What, if any, unanticipated fluctuations in portfolio value might affect my overall investment goals?

When you have the answer to these questions (preferably written down and filed with your investment advisor), the next step is to identify the investments that are right for your circumstances. Constructing an investment policy statement is part of the overall portfolio management process.

Step 1:
Create Investment policy Statement
Focus: Short term needs
Long term needs
Knowledge about investing
Expectations

Step 2:
Examine current and projected financial, economical, political and social conditions that will affect investments. (Your financial advisors’ research department can help you with this.)

Step 3:
Implement the plan by constructing the portfolio by meeting your needs with the minimum risk levels.

Step 4:
Monitor and update as the investor needs and environmental conditions dictate.

Remember, financial planning is a partnership between you and your financial advisor, with the ultimate responsibility in your hands. Are you serious about setting realistic investment goals?

How Important Is Your Retirement?

The challenge with retirement planning, is that it is not one of those events where you will see the effects of not planning immediately and certainly you will not see the negative impact until when it hits … in your future.

Consider this … electric bills, car loan payments, rent, school fees, groceries; these are all immediate bills that must be paid NOW, in the present. If these are not dealt with the negative impact is immediate: lights off, additional interest on car payments or if really severe – you cannot register for school or there is no food to eat at home. The negative effects of not providing for these imminent bills are clear & present!

It’s not as obvious when the impact of an action is not immediately evident – for example, making your life insurance policy lapse. The effect of this is in the future and therefore does not appear to be as important, as the impact is not felt now!

This period of life requires planning today in order to reap benefits tomorrow. Retirement is typically defined as the point where an individual stops employment whether they are self-employed or employed to an organization. When this new stage of life (retirement) is attained there are a number of changes to which one has to become accustomed. Most important of all, is not receiving your regular stream of income, which you have had for the past 40 years of your working life! Effective Retirement Planning can provide the support you require for your retirement years.

But what is effective retirement planning? It is taking the necessary steps to sit with a financial advisor and ascertain the best way to effectively plan for what you want in your future. One of the simplest and most convenient ways of doing this is becoming a part of a pension plan. Pension plans offer significant tax-advantaged savings towards retirement.

If you are employed to a company, ensure that you are a part of the employer-sponsored pension plan and maximize your contributions to this fund. However, if you are self-employed or employed to a company that does not offer a pension plan, then you can become a plan member in an Individual Retirement Account.

It is time to take responsibility for our future and begin actively saving towards retirement. This benefit is no longer limited only to persons employed to an organization, as both self-employed individuals and persons employed to companies who do not offer a pension can now save in a structured pension plan. With the improvements to Approved Retirement Accounts, now being offered by financial institutions, these persons can now take advantage of the tax savings, which are an inherent feature in pension plans.

Retirement must be treated as an important aspect when planning your finances. The effects of not planning can have far reaching impact for both yourself and your family.