The Importance of Clear Financial Goals
Figuring out your financial goals may be one of the most important things you can do to help achieve long-term investing success. When you’re young, your financial goals are usually simple and short term—such as establishing an emergency fund, starting your retirement saving, buying a new car or accumulating a down payment for your first home. But, as you become more financially stable, your goals should reflect the increasing complexity of responsibly managing your wealth.
Where to Begin
Identify Your Goals
Setting your financial goals can be challenging, and most people don’t know where to start. Financial goals don’t just have to be about saving money. They can be about anything tied to your finances. Drafting a will, assigning account beneficiaries, selecting a power of attorney in the event you become incapacitated, and establishing trusts can all be financial goals—and are all things worth doing! In many cases, common financial or investment goals may include:
Goal 1: Avoid Running Out of Money
For some investors, this is their primary goal to ensure they avoid aged poverty. While some believe the key to avoid running out of money is to invest in low-volatility investments (bonds, for example), this approach isn’t always prudent and could be detrimental.
Goal 2: Maintain or Improve Lifestyle
If you want to ensure your preretirement lifestyle continues or enhances throughout retirement, then you’ll want to maintain or grow your purchasing power. But inflation will have an impact, so it’s important to consider this is in your retirement plan.
Goal 3: Increase Wealth
If you’re able to enjoy your desired retirement lifestyle with no fear of depleting your assets during your lifetime, it’s possible you wish to grow your investments over a long period - often beyond your life expectancy. Common goals are to leave a legacy for heirs and/or a charity.
By listing out your personal finance objectives, you can hold yourself accountable and increase the odds you achieve them. There’s a reason many of us still make grocery lists! It reduces the chance we forget something critical.
Identify Your Investment Time Horizon
Once you’ve identified your financial goals, it is important to determine the length of time you need your money to last so you can achieve these goals—also known as your “investment time horizon.” For longer-term goals, this may be your life expectancy or even extend beyond that depending on your goals. Shorter-term goals may only require a specific number of years, for example, setting aside $200 per month for five years to pay for a kitchen renovation.
Assess Your Financial Picture
Another important part of achieving your financial goals is having a clear understanding of your current and expected future financial situation. For example, you should document your current income, expenses, investments, debts and savings. Likewise, you should identify future cash-flow needs required to help you maintain a comfortable lifestyle in retirement.
Achieving your financial goals isn’t easy, especially if you are trying to do it alone. Fisher Investments can help you achieve your long-term financial goals. We offer our clients tailored portfolio management services and the right advice to help them stay on track.
Learn More About How We Help You
It’s always the right time to plan for retirement. Whether you’re curious about saving for retirement, preparing to retire soon or already in retirement, we can provide resources to help you create or adjust your retirement plan so you can be confident about what’s ahead. We walk you through some retirement planning basics, such as what to look for in a money manager, how you should change your investment approach through retirement and much more. Additionally, we offer resources for creating a financial plan, including estate planning, analyzing insurance and annuities, and understanding how to best utilize Medicare and Social Security.
Grow Your Wealth
Growing wealth is a priority for many investors—whether that’s to prepare for retirement or achieve long-term goals like leaving a legacy for heirs or a beloved charity. At Fisher Investments, we take the time to get to know your goals and personal financial situation to help you grow your wealth over time. We also believe an educated investor is a better investor. That’s why we help our clients understand their investments. We have resources available to help investors know what types of assets are available, understand the importance of asset allocation and learn strategies for generating investment income.
Preserve Your Wealth
Maybe you are already at a point where you feel good about the wealth you’ve built—now you just need to protect it. At Fisher Investments, we can help you avoid common mistakes that may jeopardize the likelihood of preserving your wealth. For example, many investors often ignore the insidious impact of inflation on their income or withdrawals. Others underestimate expenses they may incur later in life. For example, your spending on eating out might decrease, whereas healthcare costs can increase dramatically.
The best ways to preserve your wealth are to have a well-built retirement plan and to regularly review your financial situation.
Manage Your Estate
When you hear the phrase “estate planning,” the first thought that comes to mind may be taxes. But, estate planning is about more than just reducing taxes. It’s about ensuring your assets are distributed according to your wishes.
While talking about death and inheritance can be unpleasant, estate planning can give you peace of mind over what will happen to your assets (and debts) after you pass away. It can also provide helpful clarity to your heirs.
At Fisher Investments, we believe having these difficult conversations early on will set you and your family up for success over the long term. We also provide resources about the basics of estate planning and methods for discussing your plan with your beneficiaries.