Becoming Your Own Financial Advisor – Part 1


Failing to plan is planning to fail – Benjamin Franklin

If you built yourself a home without using a blueprint, what do you think the result would be? Now, you could end up being extremely lucky and somehow get the house you dreamed of.

But what is far more likely is that the house wouldn’t be anything like what you envisioned. You would probably have problems with plumbing and electrical outlets. You might need to move windows and doors. Or you might need to fix an uneven floor.

Imagine the house that Gene Hackman’s character is building in “Unforgiven” – off plumb and a mess.

The same idea holds true for investing.

Without a plan, you could somehow get lucky. But without intervention from a deity the odds are against it. If you don’t have a well-crafted plan of action and some clear goals, you most likely are not going to end up where you want to be financially. You will meet neither your short term nor your long term goals.

You have to have a plan to make a plan

As you might have guessed we can approach investment goals from many angles.

In the traditional approach, investors focus on generating the highest possible returns or on beating the market. This is done while staying within the individual investor’s risk comfort zone.

Another newer approach in wealth management emphasized goal-based investing. This type of investing emphasizes investing to reach specific life goals – like buying a house, saving for a child’s education or building a retirement fund. This is done in lieu of comparing returns to a benchmark

The theory behind goal based investing:

  • If you set a goal you are much more likely to achieve it – people with written goals are 50% more likely to achieve than people without goals that are written down.
  • You can track goals and tracking goals aids in motivation to achieve them.
  • Investing can be adjusted when you consider time horizon and risk level of each goal.

It’s crucial to commit to action whatever approach to investing that you prefer. You cannot not just leave your financial health to chance.

When looking at your financial health many people like to work with financial advisors. Financial advisors are professionals who provide financial advice and guidance.

Financial advisors can help you to navigate your options and assist in finding investments that match your risk level.

While it makes sense in many cases to work with a financial advisor, you may want to consider becoming your own financial advisor. While it takes some time and effort you may find that it works better for your own particular circumstances.

In this series of articles on becoming your own financial advisor we will look into the various things you will need to consider when investing.

Keys To Your Financial Success – Goal Setting

Your very first step in successful investing – and really anything that you want to achieve in life – is creating measurable, realistic and attainable goals.

Ask yourself “Why do I want to invest? What do I hope to achieve? What am I willing to do to reach my goals?”

There are lots of goals – all of them worth setting. But you can’t do it all. Really give some thought as to what you are hope to do financially.

Are you:

  • Saving for retirement?
  • Saving for a home?
  • Setting passive income streams during your retirement?
  • Giving a portion of your earnings to charity?
  • Saving seed money for a new business?
  • Establishing a legacy gift for your family?
  • Saving for your dream wedding?
  • Paying for your child’s education?
  • Taking a “bucket list” vacation?

All of the above or more?

The next thing you should do it prioritize your goals by when you want to achieve them – are they short-term, mid-term or long term goals. This gives you a “time horizon” to achieve them.

I find that by using mind-mapping software, putting them down in a table or going old school and using a legal pad and pen make a pro/con list I can get organized.


Here is an example

Short Term Mid-Term Long-Term
Emergency Fund Funds for new business Nest Egg For Retirement
Financing a Wedding Down Payment on home Income for retirement
Vacation Madelyn’s Education Financial legacy


As you might guess getting your goals “on paper” makes them more concrete and real. Statistics show that when people write down their goals they are more likely to achieve them.

You can make yourself accountable by sharing your goals with your spouse, family or friends. That extra motivational push and fear of embarrassment at not working toward your goals will help you keep going.

How Much Will You Need To Reach Your Goal?

After you establish your goals you will need to flesh them out and get more specific.

You will need to attach a dollar figure to each goal. It may be easier with some goals to say how much you’ll need.

As an example let’s say you want to help your daughter pay for her wedding. You decide to give your daughter $5,000 to help with that.

Or perhaps you want to save $10,000 to do the Camino de Santiago.

These are easy to define monetary goals, and perfect for goal based investing.

It might not be as easy with other goals. Because of the nature of the goals, it’s a bit trickier to nail down a specific amount – so you’ll have to spend some time doing research and calculations.

Luckily, there are lots of online calculators that can help. For instance, using your favorite search engine you can search for the type of calculator you need like “retirement calculator” or “college savings calculator”. It’s a great jumping off point.

With your list of goals – and remember the more specific the better – and their concomitant financial objectives you will find it easier to plan, budget and choose the right investments.

In the next article in this series, I’ll detail various retirement and tax-advantaged accounts that will assist you in achieving the goals you defined.


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