This is a really tough start. I mean, I’m sure we all know what we want as far as our financial goals :
Get the greatest return on our money!
But that’s sooo much easier said than done.
This is the first lesson of Investools, and in some ways I don’t totally agree with it.
Defining your Financial Goals
- How many years until you reach your goal – is this for retirement, short term, long term, college fund, etc…
- Do you want to high risk, low risk?
- Are you planning on being active or passive?
- What do you plan on adding into your portofolio? Stocks, bonds, mutual funds, CD’s, etc…
- Do you want to use a financial planner or go at it on your own?
As you can see there is a lot to take into account.
The Disadvantages and conflicts of having a Financial Plan:
There is no doubt in my mind that having a plan is essential road mapping to where you want to invest your money. However, the main downside to this is you CANNOT predict anything when it comes to the returns you’ll be getting.
- How do you know if you’ve chosen the next big winner
- How do you know what the market will do - it’s becoming more and more unpredictable, certainly not enough to say – ‘I will be earning 12% return yearly’
- What if in the next few months you decide you want to go more aggressively with your investing
In my opinion, you definitely need to have a GENERAL layout. But don’t get to wrapped up in the exact numbers. Have an outline. You can at least decide on what percentage of investments for the portfolio you will have. Ex: 25% stocks, 25% ETF’s, 25% dividends, 25% money market or savings
This will help you figure out more of where you should start.
My Financial Goals and Where Do Start:
I have two accounts that I will be working with – my individual trading account and my Roth IRA account
Goals for my Individual Account
This is my aggressive account – I plan to go nuts here. I’m not that young, almost 40, but what the heck – you only live one right! So why not just do it. Don’t get me wrong, I won’t be doing it just like that – I plan to learn all the ins and outs of it first, but my views are aggressive:
25% emerging markets – etf’s mainly, however, if a certain stock or 2 catch my eye, I’ll test them out
25% penny stocks – I’ve always had a weird pull to these stocks, and some of them can really do well.
25% Commodities – strictly ETF’s – but am definitely into this sector (including precious metals)
25% Dividend stocks and ETF’s – This isn’t as aggressive as the others I plan on working with, but I love the fact that I can get some cash back, and working with DRIP programs, helps to reinvest the money back into the stocks/ETF’s I will be choosing
Goals for my Roth IRA
This account I plan on being a lot less aggressive and even more passive if possible.
25% Commodities – precious metals in general aren’t too aggressive since I am sure our resources are dwindling and no matter what these will always come out the strongest in the long run, so for me it’s not an aggressive move
25% Emerging markets – living outside of the US for the past 10 years I get to see personally that the US is not the strongest power. There are many nations that are equally powerful with very strong economic foundations. However, as opposed to my individual account, I won’t be investing in the newer more emerging nations, but in the ones that have been established for a while.
25% Dividend stocks and ETF’s
25% Index funds – these are the least risky of all and many MANY people swear by them!
What are your financial goals?