Don’t Fly Blind
Would you build a house without a blueprint? Would you trust a pilot or a doctor that is going to fly blind without a plan? No. But in today’s world, anyone with a heartbeat and a few dollars in their pocket can open an online brokerage account and start trading stocks. In fact, all throughout history, it has never been easier, or cheaper, for people, anywhere in the world, to trade stocks. So, most people dive in without taking the time to study the market or create a well thought out financial plan. The result is most people really do not understand what they are doing and unfortunately end up losing money.
Introducing 50 Park’s
Custom 5 Step Financial Plan
Step 1: Needs Assessment
Step 2: Identify & Overcome Challenges
Step 3: Set Goals (Short, Intermediate & Long-Term)
Step 4: Plan For Life (Insurance, Estate Planning, Healthcare, etc)
Step 5: Build Your Portfolio & Enjoy Life
Why Create A Financial Plan?
The primary reason why people should create a financial plan is to help them achieve their financial goals. Remember, successful people do not become successful by accident. They work hard, study the market, and develop a sound game plan that helps them accomplish their goal(s). Once you take the time to create a financial plan you will instantly be ahead of most other investors (because they don’t take the time to plan).
Success Doesn’t Happen By Accident:
Investors who take the time to create a financial plan tend to make more informed investment decisions because their decisions are aligned with their objectives. Without a plan, investors and their advisors don’t know what they are doing. They don’t know what their savings rate and average investment return need to be to live a good life to the very end. They don’t know how to determine their optimal investment strategy or whether they should buy long-term care insurance, and they don’t know the consequences of other financial decisions. They don’t know when they can retire or change their work schedule or change their income.
Avoid The Market Trap:
Since, the historic March 2009 low on Wall Street, stocks have gone pretty much straight up making this the second longest bull market in history. As a result, many investors have moved away from active managers and adopted a passive (long-only) strategy. As a result, investors have become complacent and have opted out of taking the time to create a well-thought out financial plan. Jim also told me, “Investors often come to a financial planner with a strong preference for indexing. Their financial plan will indicate the specific level of risk they need including the asset allocation between equities and fixed income.” Financial planners today need to be able to guide clients to a good financial life as well as accommodate their strong preferences. The best financial planners take care of their clients financially and emotionally. Strategy diversification can also create greater stability and consistency in clients’ overall investment accounts. When indexing is weak, active strategies can at times fill in with better returns and vice versa. An inventory of different investment strategies can help financial planners diversify investment risks and seize opportunities.
Bottom Line: Plan For Success
In life, and on Wall Street, success doesn’t happen by accident. Successful people take the time and actually develop well thought out plan(s) to achieve their success. Investors have a better chance of living a good financial life when a detailed financial plan guides their investment strategies. Especially, because there is not risk to conducting a financial plan- why wouldn’t you place that trade?