What’s the best way to ensure the money you’ve set aside for your grandchildren’s college education is being used most efficiently?
When I look at the offerings of the financial media today— radio, TV, print or online—I always feel as if I’m somehow inferior because I’m not on top of the latest news about investing.
I can only imagine how guilty people who aren’t financial professionals must feel—all because of the business press!
Financial journalists advocate becoming an “expert” on all subjects.
If you’re taking out a mortgage, then you need to know not just everything about mortgages, but also everything about homes and house repair.
And, if you’re taking out a car loan, then you need to know everything about car repairs and in fact, how cars are assembled.
I don’t know about you, but I’ve intentionally chosen not to spend my time learning all this drivel. Some of you may find doing all this research enjoyable and rewarding, but I’m definitely not in that camp.
Since I’ve decided that I don’t want to know how a car is built, I have also chosen not to do any of my own repairs, including changing the oil. Instead, I have found a mechanic who I trust. I believe that he is an expert at his work and, furthermore, he’s not going to cheat me.
That’s why I find it incredible that so many people treat the financial media as if they’re trusted advisors.
The reality is that the primary goal of the financial media is not to educate you. The publications or programs have to make a profit. They have to sell advertising, which is accomplished by delivering more viewers/readers for their advertisers.
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The single biggest mistake people make when they set goals is that their goals are too vague.
Before you can tackle the necessary decisions related to retirement, including investments, taxes, insurance, etc., you must identify your values and then determine your goals and what you want to accomplish over your lifetime.
The fun comes when you accomplish your goals and you have tangible evidence that you are living life according to your true values.
Here’s what I mean by setting specific goals…
“I want to retire when I’m fifty-five,” is too vague. A specific goal would be,
“I want to retire when I’m fifty-five and for me that means January 1, 2017, with a monthly income of $5,000 after taxes or a yearly income of $60,000 net after taxes.”
That’s a specific goal.
Another example of a concrete goal is not saying, “I want to travel.”
Instead, you might say, “I want to have $10,000 to $15,000 for travel per year. I want that money available and I want to start spending that money next year.”
You would write your goals and specify the year or the month, if possible, in which you want to start traveling and the year in which you will need to have the travel fund available.
In order for you to have a valid goal, you must have something in writing. A goal is not simply something that you discuss with friends.
Your incredible retirement goals are an important objective and having them in writing also reminds you to handle the necessary financial, legal and tax issues that go along with your goals.
Having written goals that you review periodically reminds you why you’re doing certain things and helps you focus on what really matters.
It’s worth mentioning that your goals aren’t static. Some of your goals may stay the same but others will vary as circumstances in your life change.
While you may modify your goals, your core values don’t disappear.
Ready to put your goals into action for an Incredible Retirement? We can help; contact us today to meet with one of our Wealth Managers.
If you’ve worked for one company for a long period of time, you probably feel pretty good about your employer. Furthermore, because of your longevity, you may hold a large portion of your investment portfolio in the company stock. While this may seem to be a sound investment strategy, it can be far less secure than you think.
No doubt, you’ve heard of Enron, the Fortune 500 company now defunct. Jim, in his early forties, had worked for the company for his entire career. Virtually 99% of all his family’s savings and investments were in Enron stock or stock options. At the time, this amounted to well over $2 million. Based on Jim and his wife Melissa’s goals, we told them that they had already accumulated enough to accomplish their goals. Their primary risk was having all their money tied to the future of one company. Back then, the only way they could really diversify was for Jim to quit or retire from Enron.
Initially, Jim decided to quit but then reconsidered. Since he was relatively young, he wasn’t ready for a traditional retirement. He enjoyed his job and had always felt that his Enron holdings had performed better than the overall stock market. Unfortunately, Jim and Melissa made several key mistakes:
The first one, which isn’t that obvious, is that the couple had no vision for their future; they hadn’t planned for a “new” life after his career at Enron. Since he hadn’t taken the time to create this new life, it was easier to remain in the comfort zone of his current work life.
Secondly, Jim was guilty of what I refer to as ‘rearview mirror investing’. He assumed that the past performance would continue into the future. This is actually a common mistake but one you should avoid. No matter how well run a company appears to be or how experienced management is, any company can fall out of favor with the market and investors during various market cycles. This is why many investors moved away from well established but dull companies during the tech boom. Some of the upstart high-tech companies seemed to be generating much higher profits—but this didn’t last.
So, while it may feel safe to put a large percentage of your stock into the successful and thriving company you work for, it might be a good idea to diversify and consider how to plan for any potential future risks.