“A dream is just a dream. A goal is a dream with a plan and a deadline”, says Harvey Mackay. This quote is inspiring and is very appropriate for all of us who have financial goals to achieve in our lifetimes.
Mere sailing along or coasting does not help us to reach our destination. Purpose, and will to achieve, is the driving force, which will take us to our dream house or steer us through to a comfortable life after retirement.
“The majority of the working population will spend over 75000 hours , will earn £ 1million in wages. However, when it comes to retiring ther is a high probability that very little of this money will be left.”
-Mark ship man.
More specifically, moving along in the right direction does not necessarily imply that the track is right. Not having specific goals can be compared to driving at night without headlights. It is an uncertain journey, and one is never really sure that they will reach the destination.
The following are the tips to be followed in order to cruise to the financial goals at the right pace.
1 Destination Targeting:
It is often that people let the investments move along in autopilot mode. They put off setting a final destination simply because it requires more involvement and commitment. This sort of procrastination is detrimental because it delays the process of taking the next logical step. Holding back would mean that the cherished goal would remain distant and could move further away.
When you have enough money left over paying the cost of living, you may be able to make that extra money go to work for you by investing it to earn a financial return.Your current financial condition and future expectations are the basis for all your investment decisions. So you should know your current financial status before doing investment. It will determine which investment strategy or strategies you should follow.
Financial goals may vary person to person. Most of the time they are related to our dependents and unprecedented events. For example you are able to save certain percentage from your earnings for your child’s marriage, education or your retirement. Or perhaps, you want to buy a car with in a two years while you may invest in a lump sum for a short period.
2 Use a Compass:
A compass assesses your position. In the same way there is a need to assesses the financial goals and plan accordingly. Working individually, it may not always be feasible to get the perfect financial plan that best suits all your needs. Taking the help of a qualified financial planner is a wise choice in such circumstances.
To be a successful investor you have to understand
a) psychological needs
b) Strategies
c) end result of your investment.
It means successful investment needs to possess is a certain mental attitude and require to follow the long term trends whenever that will happen
A smart investor needs to fully comprehend how risk is measured and its potential ramifiaction. You also need to determine your own risk tolerance.
3. Map your current location:
While on an outing it is necessary to chart our position on the map so that we do not get lost in the wilderness. In the same manner while embarking on the financial journey it is imperative that we know our co-ordinates on life’s map.
- Prioritize your goal,
- List them most important to least important.
- Calculate the financial costs of each goal that requires financing.
- Set a completion of time frame for each goal and evaluate the total amount needed to attain the goal.
- On the other side differentiate how much you have at present and how much will be required in future.
- The result is your financial need.
Where we stand and where we want to reach on the financial front are important points of our financial life. Which financial peak to scale first and which one to be left for the end are decisions, which need careful thought, intense planning and neat execution.
It may not be possible for an individual to do this alone and the helping hand from a guide, a qualified financial planner will make scaling the peaks a lot easier.
4. Know your destination:
“A journey without destination is meaningless.” Before we start our journey we should determine our destination and should consider who are accompanied with us.
While driving a vehicle it is imperative for the driver to know the destination, else the journey is purposeless. The same holds true for our financial journey as well.
The ideal outcome that is desired should be clearly defined and etched in the mind. This planning of destination needs to be done meticulously and might require inputs from other family members of the individual.
5. Set the pace:
The financial journey, unlike many other journeys, requires a head start. The sooner it is on track the better. An early start will also ensure that one reaches their cherished destination faster. There’s no time like the present to start designing the financial future and making steady progress towards the goal.
Financial losses occur in all asset classes. But it will bounce back at the right span of time. The financial journey is same like claiming the mountain. We will meet some up and downs until we reach the peak.
Bottom line:
From coasting and meandering on the financial path of life to cruising along at the right pace to reach the final destination, it takes a lot of maneuvering skill and dogged resilience.
It is not always possible for individuals to embark on this journey unassisted. A professionally certified financial planner can be an ideal guide who will hold hands to tide over rough edges and help people to reach their financial destination comfortably.
Let us start the journey.
The author is Ramalingam.K an MBA (Finance) and certified financial planner. He is the Director & Chief Financial Planner of holistic investment planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He Can be reached at ramalingam@holisticinvestment.in
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