Defining Your Goals
Feeling
low cause you're out of dough?
You and your honey need some more money?
It's not that tough to have enough.
You have to plan, and we know you can!
As you wander your way through life, you will
realize that life is a series of choices. You will be required to
make millions of choices in your lifetime. Some of them will be
simple choices, such as what to wear, or what to have for dinner.
These choices will have very little impact on your life, because there
really isn't a wrong choice. Some other choices may be a little more
difficult, such as what tires or television to buy. If you make the
wrong choice here, you can either live with it, or remedy it without too
much cost. Then there are the major decisions, such as
buying a house, selecting investments, or choosing a career. Making
a poor choice here could be difficult and expensive to remedy, and
could cause friction, stress and other problems. In order
to make the right decision the first time, research must
be done, and this can be time-consuming. Knowing your goals
can simplify your decision-making and reduce the number of decisions you
have to make. This means you can have more free time, less stress, and
less chance of making the wrong decision. We have made a conscious effort to reduce the
number of decisions we have to make. We do this by setting goals,
planning, and reviewing our progress. We use the KISS method - Keep It
Simple Stupid, and it seems to work quite well.
As an example, we invest the majority of our
investments in stocks, and in the beginning this required us to make a lot
of decisions. We started off investing in mutual funds. We
relied on our investment advisor to recommend the right funds, and we
relied on the fund managers to make the right decisions for the
funds. We didn't like having so little control over where our money
was invested. Due to this, as well as the high MERs
and front end loads, we went to a full service broker and started buying
individual stocks. We also started investing in options,
buying and selling calls and puts. Using a full service brokerage
didn't work out too well either, because if a broker phones, a decision
has to be made. Do we sell the stock he recommends selling, and buy
the stock he recommends buying? Do we buy a put option on a stock,
or do we sell a put on a stock? Do we buy a call on a stock, or do
we sell a call on a stock? Do we take his advice, or don't we?
These are all decisions that have to be made, with little information
other than the advice of the broker. Also, after many years of
options trading (10+), we started analysing our results in more detail,
and found that at best we were breaking even. Trading in options
took up a lot of time, and required us to make a lot of decisions.
We now use a discount brokerage, do not trade in
options, and do our own investment research. We buy stocks or exchange
traded funds (ETFs) that we plan to hold forever. Thus, we
simplified our life and eliminated a lot of decisions.
You can eliminate some major decisions by setting long
term goals regarding your financial future. It's not as difficult as it sounds, because
you don't have to plan your whole financial life at once. At the
start, you have to set out your major goals. Knowing these goals
will help you make the smaller decisions along the way. With some
good planning, and good luck, you should be able to eliminate the majority
of your financial decisions. The fewer the decisions you have to
make, the happier you will be.
Not all your goals will be set in stone, and your
priorities may change over the years. However, having
goals and re-examining them occasionally is a basic part of
the plan towards financial freedom. Your goals should
include:
