Thursday, July 31, 2008

Developing Success in Our Lives......

Developing Success in Our Lives......

We often sit down and wonder......How do we develop and ensure success in our lives.......In the path of living our lives, there are many dreams and goals that we strive to reach. Some of these goals are very short term, some are intermediate term and some are long term. Of course, when you add dreams to that, there are few that are really out there!

Each goal matters, but, it only matters if these goals are clear, written down, and reviewed often. Otherwise they are just wishes and dreams of 'passing thoughts' in our busy brains. Our senses invoke those things, and well, they ae not clear, precise, committed goals by any stretch of the imagination. If that wish and dream reoccurs, then it should be documented first, and then you have to site down and figure out how to achieve it.

Most goals will require you to have access to resources that you never had, so better buckle down to gather those resources, convince people around you (that you need) and also start collecting those resources. A goal of a new car needs money for the downpayment, a drivers license, a garage to take care of it, access to an insurance agent and finally access to roads! Seriously, when you think about it, those are your resources. Think detail, think without any assumptions, and make the detailed plan on how you are going to achieve each of these points (in detail).

A lot of people have money goals.....So, here is a writeup borrowed to give you the l0-down on how to get there from a competent book-author. This is his summary:

If the objective with saving and investing is to accumulate sufficient assets over a period of time so that you can adequately fund a goal. When setting up an investment plan, there are a few considerations about goals that are important to evaluate.

Time horizon
One of the most important factors is how long you have to accumulate assets. The longer the time period, the less you have to save. Also, if the goal is far in the future (e.g., retirement), then you have more flexibility in the appropriate investment strategy. If the goal is short term in nature, your investment choices will typically be more limited.

Flexibility in time
Some financial goals have a rigid time horizon. For instance, your child may plan to go to college in four years, the summer after completing high school. In this situation, it is not easy to delay the need for the first year’s tuition and room and board (although you could take out a loan to defer the full cost).

For other goals, like retirement, the specific horizon may be inherently more flexible. As an example, you might choose to delay retirement by a year or two if markets perform particularly poorly. The point here is that goals with variable time horizons create additional flexibility for an appropriate investment strategy. If things don’t go as planned, you might be able to delay the goal to ultimately reach success.

Flexibility in size
For some financial goals, the amount of money I needed is known in advance and is fixed. For instance, maybe you need to make a property tax payment next April of $15,000. In this case, the tax assessor is not going to take $13,000 if markets happen to perform poorly. You need to come up with exactly $15,000 next April.

For other types of goals, the amount needed might be squishier. Perhaps you are saving money for the purchase of a vacation cabin in 5 years. You might like to have $100,000 to purchase the cabin of your dreams, but maybe you would be willing to settle for an $80,000 one a little farther away from the lake if markets don’t perform as well as expected.

For goals with less rigid funding requirements, you can accept more investment risk than for goals with very specific requirements. If markets don’t perform very well, then you have the option to reduce your expectations a bit. In many ways, this idea is similar to the flexible time horizon mentioned above.

Lump sum versus recurring
Another consideration is whether the money to fund the goal is needed all at once (lump sum), or whether it will be paid out over time. For instance, you typically don’t need to come up with the full cost of a four-year college education all on the first day of classes. The payments will be generally spread out over a four-year period. In effect, goals with recurring payments have a longer time horizon than lump sum goals, depending on the length of the period over which the payments occur.

Of course, retirement goals are a special class of recurring payments, since the length of time that you (and perhaps your spouse) will need retirement income depends on your lifespan. Since we don’t know when we are going to die, this creates the need for a string of income payments with an uncertain end date.

Keep in mind the idea that flexibility — either in terms of timing or the size of the goal itself or the dedication needed to achieve your goal — is an important consideration when selecting an appropriate savings and investment strategy.

Go For It Folks.....Dream......Define a Goal......Design HOW to Achieve It......Enjoy the Fruits.


ps: This is how I have accomplished EACH of my goals, all the way from 10th Grade until now (and I have teenagers now!!!!!)

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