Return to www.Rollover.net Home                                                                                                                                         December 2013
Investment Strategist
Investment Strategist
Stifel wishes you
Happy Holidays and
a prosperous New Year
Setting Goals and Establishing Strategies to Help Meet Them
It’s rare in life that you meet someone who doesn’t have goals. Let’s face it, no matter how
successful, it’s human nature to strive for bigger and better things in life. However, if your goals
are not clearly defined, how do you know what you’re working toward. Furthermore, how will
you know if your goal is even achievable.
Getting Started
The first step toward achieving your goals is to
clearly de ne them. For many people, sitting down
and writing a list of goals is a good start in determining
what they want to accomplish. This exercise can also
help you separate your goals from your wants. For
example, your goals may include paying for a child’s
education, leaving a legacy to your heirs, or enjoying
a comfortable retirement.
Your “wants," on the other hand, may simply be things you’d like to have, but wouldn’t
necessarily devastate you if it doesn’t transpire. For example, you may want a new sports car,
but that may not be a long-term nancial goal (such as saving for retirement) that you’re willing
to work toward.
Writing down your goals can help in a number of other ways. For many married couples, writing
down goals can be an excellent way to establish a dialogue about their individual goals and
whether or not they match those of the other spouse. If you want to buy a recreational vehicle
and travel the country a er retirement, while your spouse would prefer to pay o your home,
your divergent goals may have an impact on how you save for retirement.
When writing down and de ning your goals, it’s a good idea to be as clear and speci c as
possible. For instance, simply stating that you would like to retire at an early age may be too
vague. Instead, devising speci c goals, such as retiring at age , purchasing a condo in Florida,
or taking one luxury trip each year during your retirement, will help you better determine how
much money you will need to have the retirement of your dreams.
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Writing goals down can help you prioritize, as short-term goals will have to be considered
in relation to long-term goals. For example, if your short-term goal is to purchase your dream
home in the next ve years, how will that a ect your longer-term goals, such as saving for
retirement. If saving for your dream house becomes overwhelming, it may hinder your ability
to contribute to your retirement savings, thus jeopardizing a long-term goal.
Pursuing Your Goals
Once you’ve hammered out your goals and have decided what is truly important to you,
you’ll want to develop a strategy and get started as soon as possible. By starting to invest
early, you can take advantage of the power of compounding. Compounding, simply put, is
an investment’s ability to generate earnings on reinvested earnings. When this concept is
utilized in the pursuit of long-term goals, such as saving for retirement, where funds may
be accumulated for years or even decades, it can be pretty powerful.
Consider the following scenario: An investor receives a sum of $ , from an inheritance.
Knowing that he needs to begin saving for his retirement, he decides to invest the entire
amount in a security o ering a percent annual return. During the rst year, he earns $
on that investment, giving him a total of $ , . In the second year, interest accrues not
only on the $ , , but also on the $ earned in the prior year, bringing the investor’s
funds up to $ , . This process would continue for the remainder of the time that the
funds stay invested. Of course, this is a hypothetical illustration only and does not reflect
actual performance of any particular investment.
The longer money is le in the account, the faster it may grow, which is a clear indication
of the importance of initiating a savings strategy early.
Seek Professional Guidance
Creating an overall strategy to help
you reach your investment goals on
your own can be a daunting experience.
Therefore, it may be a wise idea to seek
guidance from a quali ed, experienced
investment professional, such as your
Stifel Financial Advisor. By discussing
your goals with your Financial Advisor,
he or she can help you determine which
investments may be suitable for your
needs. He or she can also help you calculate how much you need to invest on a periodic
basis in order to reach your long-term goal. Furthermore, he or she can help you make
changes to your portfolio should your goals change.
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Automate Your Investing
A great way to stay on track to meeting your investment goals is by automating your
investments. For example, if saving for retirement is one of your long-term goals, consider
having a set percentage of your paycheck automatically deducted and invested in your
(k) or IRA. You can also allocate a monthly withdrawal from your checking, savings,
or brokerage account to purchase shares in a mutual fund, annuity, or other investment
vehicle. By making consistent contributions to an investment program, you can enjoy
convenience while also taking advantage of dollar-cost averaging.
Dollar-cost averaging is simply investing equal or fixed amounts of money at regularly
scheduled intervals. With this investment strategy, you will buy more shares when the price
of your investment has declined and fewer shares when the price has risen. Over a period
of time, you may lower your average cost.
By dollar-cost averaging, you may reduce investment risk by not investing substantial
amounts at the wrong time. In addition, by investing on a regular basis, you can avoid
making bad decisions based on emotions, such as the natural tendency to stop investing
in a weak market.
Investors need to consider that dollar-cost averaging does not assure a profit or protect
against a loss in declining markets. Before embracing the dollar-cost averaging strategy,
investors should consider their ability to continue investing during periods of falling prices.
Staying the Course
The key to achieving any nancial goal
is discipline. Always keep your goals in
mind and remember them when tempted
to deviate from your original plan. For
example, while it can be tempting to lower
your (k) contribution for a few months
to fund a family vacation, think of how
deviating from your original plan, even
if for just a few months, may impact your
retirement savings in the long run. By
understanding what you want to achieve nancially, developing a sound plan, and sticking
with your plan, you will put yourself in a better position for reaching your goals. For more
information on pursuing your nancial goals, contact your Financial Advisor today.
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