Do You Have a Number?

Are you among the 1%? No, I’m not necessarily speaking about the top earners but more specifically, those investors that have properly planned for their financial future. Do you have a financial plan with a specific target number? My guess is less than 1% of the population has a written, date and dollar specific, financial plan that informs how they make ongoing financial decisions. The other 99% are mostly just flying by the seat of their pants.

Perhaps it’s not surprising that so few investors have a detailed dollar-oriented plan since essentially 100% of the financial media coverage of the economy and markets focuses on investments alone. They want you to believe that as long as you select the right investments and avoid bad markets everything will work out. As Lee Corso likes to shout on SportsCenter, “not so fast!”

Dynamic Financial Planning

The reality is, without a financial planning foundation, you have almost zero chance of everything working out. I use the active tense planning with intention since plans should be dynamic and reflect changes in both inputs and outcomes. It’s not a ‘set it and forget it’ type activity. That’s the real motivation to engage in planning from the outset. Accumulating sufficient investment assets to sustain your lifestyle for a couple or three decades past retirement is a tall task and requires diligent planning.

Can You Relax?

Better , more reliable financial outcomes are a byproduct of financial planning. The investment decisions that ultimately flow from financial planning have a noticeably different theme because they aren’t random. These decisions take on a new purpose and allow you to indeed become one of the small minority that are financially prepared for the inevitable twists and turns ahead. As a client told me recently, “now I can relax.”

The alternative to engaging in the ongoing process of financial planning is to constantly chase investment returns. This usually becomes a highly frustrating adventure. Inevitably you end up with an overly complicated basket of investments that often have high levels of risk that don’t mesh with your age or stage of life.

We Help Clients Manage Risk

Properly connecting your overall risk level with your goals is virtually impossible without a clear financial planning framework. Our job is much more about helping clients manage risk than it is about maximizing returns. The former can be somewhat controlled while the latter cannot.

Perhaps most important, financial planning helps identify the dollar amount of financial assets you need to be and how to get there. Remember, the overarching purpose of investing is to accumulate enough to sustain your lifestyle for decades. Your money will either outlive you or you will outlive your money. The ultimate outcome depends upon your decisions today. Start there. Ready for a real conversation?

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