Beginning a New Year with the Right Plan

Beginning a New Year with the Right Plan

January 18, 2021

Now that we are beginning this new year and 2020 is part of history, it is good to review one’s financial plans looking forward.  Goal-focused and planning-driven investors are sharply distinguished from investors that are market-focused and driven by current events.

Long-term investment success and wealth accumulation comes from continuously acting on a well-developed plan rather than continually reacting to current news and events in the economy and the markets.  

Two questions: 

  1. Do you have a well-developed plan in place? If not, you should.  
  1. If you have a plan, do you regularly review your plan to make sure it remains on track for the long term and make needed adjustments if significant “life” events have taken place? Unexpected events like death of a loved one, divorce, or early forced retirement are some examples.

Whether one is actively working, is semi or fully retired, having a well thought out developed plan in place is common with most successful investors, affluent individuals, and families.  Those people typically share many of the same goals of obtaining financial independence while maintaining a desired lifestyle and many choose to eventually leave legacies to loved ones or cherished institutions. 

Whether one is actively working, is semi or fully retired, having a well thought out developed plan in place is common with most successful investors, affluent individuals, and families.  Those people typically share many of the same goals of obtaining financial independence while maintaining a desired lifestyle and many choose to eventually leave legacies to loved ones or cherished institutions. 

Well-designed plans will let you know what 'your number' is for several scenarios.  Numbers needed to save and invest to reach a target amount at a target date, numbers expected from traditional income sources like pensions and social security at specific target dates, numbers desired for amounts needed to maintain lifestyle goals for target length of time frames.  A well-designed plan will have all numbers account for inflation and taxes in coming years.  Those who know their number, generally fare better than those that don’t.

There are numerous resources available to put together a financial plan, primarily books, seminars, online calculators, and software.   Some are advertised as being free without obligation, others have a cost associated with them.   Whether accessing resources for free or paying for the access, the important question to ask is “how likely will it be that I will implement AND follow the plan”?  I am frequently reminded of Clint Eastwood’s Dirty Harry character quote in the movie Magnum Force and thought I’d pass it along, “A man’s got to know his limitations”.  If one has the self-discipline to develop and follow a plan on their own, they probably answered “yes” to the previous two questions. 

Many choose to work with a financial planner who is also their behavioral coach and trusted advisor to help them develop their plan, stay on track, and avoid making mistakes by having regular review meetings.

A good, trusted advisor and coach will likely also be the one that prompts and encourages clients to make sure their risk exposure to poor health, disability, and death, is properly identified with a number and protected with insurance when it is needed.  The trusted advisor will also be the likely one to encourage clients to make sure Wills, POA’s, and related documents are up to date and easily retrievable when needed. 

If you are one that has the self-discipline to “do it yourself”, congratulations.  Maybe you already have a good relationship with a trusted advisor and coach, just make sure you have a plan in place with him or her and you are on track. Many recognize the need and value of having a trusted advisor and coach but do not have that relationship established. This should be a new year’s resolution and a priority to find one.  The best time to plant a tree is now because you cannot go back in time.  The same goes for deciding when to get a plan in place. 

Securities and Advisory Services offered though LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.