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Your Why and Determining Your Financial Goals



Traditionally, investors have focused on generating the highest possible returns or beating the market, while staying within their comfort zones in terms of risk. My preference to wealth management is goal-based investing, which emphasizes investing with the objective of reaching specific life goals. Whichever approach you prefer, the important thing is to do something, and not just leave your financial health to chance.



Next, arrange your goals by the time horizon for achieving them. Do some research and take advantage of financial and retirement calculators available to put a value/cost on each of your goals.







After you define your goals and figure out how much money you need and when, the next step is to reverse engineer an investment strategy that will make it happen. An investment strategy is basically a plan of attack that guides your decisions based on your goals, risk tolerance, and future needs for capital. Some keys to making a sound investment strategy:

Start now. Seriously. Stop putting it offKnow what your looking for so that you are anchored by the must-haves and not distracted by the nice-to-havesTake advantage of the power of compounding Think twice before investing in anything with high costs/fees Diversify your investments.




Investing for Cash Flow

You would need to have passive cash flow in excess of your net income If your goal is to eventually quit your job so you can spend more time with your family, Let’s say for example, you have $300,000 in a retirement savings account that you can invest. With that benchmark in mind, an investment that yields an 8% return would to generate roughly $24,000 in passive income. If you make $50,000 a year, you would need to invest over $600,000 in order for you to quite your job.


Investing For Appreciation

If you are more intrigued by the huge upswings in real estate values that have been seen in cities like San Francisco and can tolerate more risk because you are already generating plenty of income and you have a fair amount of assets generating multiple streams of passive income. Your willing to gamble on the chance that you can time the market correctly and benefit greatly when the market has a huge upswing. You know the risk, and are looking for investments in rapidly appreciating markets with a strong value-add component to maximize your chances for appreciation with a large lump-sum payout event even if you have to wait for it.


Investing for Cash Flow and Appreciation

Most investors are more comfortable with a combination of the two strategies. The best way to accomplish this is to look for investments that are in a growing market that provide some cash flow throughout the lifecycle of the investment, but there is also a chance to force appreciation by adding value to the property. This is the best of both worlds with less risk.

You have to be willing to put in some time and effort. It’s important that you understand the various types of retirement accounts and investment vehicles before risking any money. Do your homework; research your options because there are many!