The Planning Process

There is a lot to digest in today’s marketplace, and investing can be confusing to anybody, especially considering the more than 15,000 mutual funds to choose from as well as options, ETFs (exchange-traded funds), fund of funds, closed end funds, fee-based or commission-based funds, managed money, hedge funds, bonds, annuities, and estate planning. So with all these choices, how do you become and stay a winner as an individual investor? How do you keep track of it all?

You need a plan (in writing), knowledge, common sense, and research. You also need to define your goals and stay on top of your investments. If you understand how an investment works, you can then figure out how to invest or make sure somebody else invests the right way for you.

Developing your estate plan and understanding wills and trusts will help protect you and your family (self-employed individuals also need a succession plan). The reality is that it’s never too soon or too late to develop an estate plan, start an investment savings plan, set up a budget, and establish a retirement plan to help guide you and your family toward achieving your goals. You need to take the following steps:

•      Identify your life goals.

•      Review where you are in relation to meeting these goals.

•      Set up a plan (we make it easy in the following chapters).

•      Implement your plan.

•      Review your plan annually.

The first step in meeting your life goals is to develop or review your personal budget. Most individuals (and companies) are surprised when they actually complete a budget. A budget allows you to identify areas that you can adjust in your spending habits, (as outlined in my book The Procrastinator’s Bible for Financial Success-step 3 your personal/business budget and step 6a your retirement budget). By defining your normal expenses in relation to your current net income, you can develop a good foundation for your financial plan.

Your plan should include provisions for savings, your children’s education, mortgage protection, charitable gifting plans, emergency funding, educational costs, income protection, asset protection, funds for retirement, and succession (death) and other expenses. This comprehensive workbook (easy fill-in-the-blanks) will help you understand and establish financial guidelines for you and your family. You need to understand how certain investments work, how to set up your estate plan, and, looking forward, how to set up your retirement plan. Organization, preparation, and understanding investments will help educate you and your family and create a solid financial and estate foundation. I prefer financial success to financial stress

Frank J. Eberhart, CEP, RFC

Financial Advisor/Author