Before you begin any journey, you need to determine where you are going and how you will get there. You also need to determine the vehicle you will use and how long it will take to get there. Getting to your determined financial destination is the same way. Before beginning this journey, you need to sit down and do some planning. Too many people think they want to invest in the stock market before deciding what they want to accomplish. They end up chasing various stock tips or ideas and getting nowhere. This is similar to just getting into a car and merely driving without a destination in mind. You may go somewhere but in the end, it may not be where you really wanted to go.

The first investment goal is to get out of debt. You may have high credit card debt that is costing you over 18% per year. Investing in a stock fund that pays 10% does not make sense in this situation. Also, you need to invest in a savings plan. You really need to have a financial cushion of 3 – 6 months of savings to cover unexpected expenses. You would hate to have to sell some stock to cover the purchase of an unexpected expense

You then need to determine your short term, medium term and long term goals. You should really have some idea of what you desire in each financial category. Pat Swanson, a Certified Financial Planner and families’ specialist with Iowa State University (ISU), states that “Individuals spend more time planning a summer vacation than they do setting investment goals”.

For example, a short term goal may be a family vacation for the next summer. This will probably require some savings but it should be put into a short term vehicle such as a 6 month certificate of deposit (CD). What I have done is set up three 3 month CD’s. I have one maturing every month. They are also the type I can continue to invest in. That way I can put money away every month and have one maturing each month in case I need the money. The interest rate is lower but it is okay for meeting short term goals.

Saving for a home or a major purchase may be a medium range goal. This may be 3 – 4 years in the future. This can be accomplished by longer range investments such as Bonds, or longer range CD’s. Once again, it is important to realize that if you have invested in the stock market, the stock market may be on a downward swing when you need the money. Therefore, a different vehicle is needed for this type of goal.

Long range goals such as retirement or saving for your children’s, grandchildren’s education are examples of long term goals depending on your age. If your expected retirement is only 5 to 6 years away, this may be considered a medium range goal. However, if it is further, you can consider investing in a higher risk, but expected higher return, investment tool such as the stock market.

You should write each of your goals down. Remember, a “goal not written is only a wish”. You should think about your goals often and visualize how you will feel when they are accomplished. This helps to make the goal real in your mind. You should also not establish conflicting goals. Make them reasonable. Also remember your goals should be Specific, Measurable, Attainable, Reviewed, and Time related (SMART).

A specific goal is one with dollar amounts and dates established for an identified purpose. Make regular deposits into your financial vehicle and be consistent. Reward yourself with some short term attainable goals. It feels good to have accomplished a goal and helps you have the realization that the longer term goals are possible.

If you decide to invest in the stock market, remember it will take some research. You probably invested a considerable amount of time to prepare for your career. Be willing to invest some time in your financial goal career. Do some research read up on different investments including the risk each one carries.

Also remember your investing goals will probably change over time so you should reassess them at least annually. Are you on track or has something changed to require updating your investment priorities. Perhaps a major event has happened that causes you to rethink what you need in life.

Have fun with your goals. This can be a fun time. It is exciting to have a dream and reach it. Remember that life is more than just reaching the final destination, it is having fun along the way.

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