“Making Money” Is Not An Investment Goal

Even if I didn’t look at my computer or CNBC I’d know that the stock market was trending higher.

How you ask? 

Simple. The lack of calls from clients in a panic or with volatility concerns. In fact, they rarely call at all when things are good.

Now the S&P 500 and The Dow have hit all-time highs! Yea!!! Hooray!!! Time to crack the champagne, right?

Well the answer is maybe. This is a great time to ask yourself why you are investing in the first place. When I pose this question to a client, I usually get the standard answer, “To make money.” I understand that answer on a basic level. However, while that answer may be obvious, it’s not correct.

Why are you investing? One of the most frustrating challenges of financial planning is deciding what you are investing for. My fear is that people have not developed and defined a goal for the money.

What is the goal? That answer is different for everyone. Some planners put fancy names on it like wealth accumulation, instead of really pushing the client to define their goals and objectives.

You should decide in advance why you are investing. It will be a huge contributing factor to how much risk you take and the time frame you have for the money. Financial goals can be defined as retirement income, college tuition, or even early retirement. Keeping the goal vague is a recipe for confusion.

So does this suggest the need for a financial plan? Absolutely.

If you need help with defining your financial goals, write me at david@lexwealth.com, or call me at (859) 225-2596. I’d love to help.