Why Are You Investing?
When asked almost everyone will say they invest for “MONEY”. In reality, however we only invest for what we expect the “MONEY” to provide us.
The most common reasons for investing are retirement, children’s college, a bigger home down the road, and financial security.
What is financial security?
Financial security when you are 21 is being able to make your car payment.
Financial security at 32 is being able to purchase a home. (You should have purchased a home long before age 35, however most people do not)
Financial security at 40 is to provide for your children, take some awesome vacations and hopefully NOT attempt to keep up with all the people next door.
Financial security at 50 is having your 401K performing well, a comfortable home that is almost free and clear while paying for the kids’ college.
Financial security at 60 is starting to think about retiring and enjoying the good life.
What, you don’t agree with any of the above? That’s okay…all people invest for different reasons.
To make a good investment program, be honest with what you expect the investment to provide for you. By having a plan with realistic expectations you further ensure obtaining your goals.
I have asked many people, “did you plan ten years ago to be where you are today?” Almost everyone says no. My response is, “how did you get where you are…did it sort of just happen and you floated along?” Almost everyone says yes.
Don’t do the above with your investment portfolio…decide where you want to end up, then work backwards to ascertain how to get there.