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It is 1998, time for new year resolutions and financial planning. 1997 has been a
disaster for some. Many investors will likely be more cautious and prudent in managing
their hard-earned money this year. People will be saving more and spending less in
line with the government's call to tighten belts. 1998 will be tough for many after
slumping stocks and currency in 1997.
Nevertheless, there is little reason to worry as opportunities are still aplenty
and there are many ways to grow your money. Proper financial planning will make the
money work for you and allow you to secure financial security through numerous investing
strategies even during rough periods. Read on if you want to learn how to chart and
secure your financial security.
Whether you are investing for your new house, children's education, early retirement,
or simply hoping for the sky, depending on your own risk profile, it is time to sit
down and chart your financial future. Nevertheless, before you attempt to do anything,
ensure you have all the basic financial necessities, 3 to 6 months of cash reserves
in a safe and liquid medium and adequate insurance coverage for emergencies in the
event of death, disability, etc.
Realize the benefits of early planning and investing. The earlier you plan and invest,
the easier the burden next time and the higher the likelihood you will achieve your
goal. Einstein said that the eighth wonder of the world is "compound interest".
In other words, time will grow your money. If you are in your 20s or 30s and have
not started anything, it is never too late to start. The cost of reaching your goal
increases everyday. Just remember that time is money.
For those who have already invested, perhaps it is time to take a look at the portfolios
and review them if necessary. Your original portfolio(s) may not suit the current
investment environment anymore. Most professionals recommend investors to review
their portfolios every 3-6 months.
Firstly, identify your goals. Just as you should know your destination when you get
into a car, you must have a target to head towards when you invest. You cannot get
anywhere without knowing what you want to first accomplish. Once you have established
your destination, you then chart out your route. You take different routes for different
destinations. Likewise different goals require different investment planning. Knowing
what you want will help determine how much money you will need.
Write down your goal(s). Ask yourself what you want to accomplish in the short, medium
and long term. What are short, medium, and long term goals? Table 1 shows what Mr.
Wong has planned to achieve over different periods. Note that his goals may not apply
for other investors as needs for individuals vary greatly.
Table 1
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Short-term
(6 months)
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Medium-term
(2-5 years)
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Long-term
(5 years & above)
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| Daily expenses |
Buying a new car |
Buying a house |
| Buying Gifts |
Buying a computer |
Children's college |
| Going for vacations |
Getting a Master Degree |
Retirement |
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