As a financial consultant, I have clients coming to me saying, “I want to invest my money and make it work for me.” First question I will ask is, “How much do you want to achieve and by when?” The client will answer, “As much as possible and with the least possible time.” At this moment I will have 2 options: One is to politely tell the client that we are not suited to be financial accountability partners. Second is to educate him about the right mindset about setting investment and life goals. And more often than not, clients will take the latter option, as they are interested as to what is the accurate blueprint of setting investment and life goals, and this will assure the clients of a higher success in reaching their fullest financial and life potential.
Investment Goals
Many people have vague goals. Usually as the New Year commences, we have new resolutions. Some will say, “I want to lose weight”, “I want to be richer”, “I want to be healthier”, etc. These are good intentions, but they are very vague, and vague goals do not get accomplished. We need to set concrete goals, goals that we can see, feel and touch it in our minds. We need to set SMART goals. The definition of SMART is:
S – Specific
M – Measurable
A – Attainable
R – Realistic
T – Time Frame
Specific - A specific goal has a much greater chance of being accomplished than a general goal. To set a specific goal you must answer the five "W" questions:
*Who: Who is involved?
*What: What do I want to accomplish?
*Where: Identify a location.
*When: Establish a time frame.
*Why: Specific reasons, purpose or benefits of accomplishing the goal.
For example, “I (who) want to get accumulate $100,000(what), in my business (where) in 10 months (when), for our wedding (why).
Measurable - Establish concrete criteria for measuring progress toward the attainment of each goal you set. When you measure your progress, you stay on track, reach your target dates, and experience the exhilaration of achievement that spurs you on to continued effort required to reach your goal.
To determine if your goal is measurable, ask questions such as......How much? How many? How will I know when it is accomplished?
Attainable - When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You develop the attitudes, abilities, skills, and financial capacity to reach them. You begin seeing previously overlooked opportunities to bring yourself closer to the achievement of your goals.
You can attain most any goal you set when you plan your steps wisely and establish a time frame that allows you to carry out those steps. Goals that may have seemed far away and out of reach eventually move closer and become attainable, not because your goals shrink, but because you grow and expand to match them. When you list your goals you build your self-image. You see yourself as worthy of these goals, and develop the traits and personality that allow you to possess them.
Realistic - To be realistic, a goal must represent an objective toward which you are both willing and able to work. A goal can be both high and realistic; you are the only one who can decide just how high your goal should be. But be sure that every goal represents substantial progress. A high goal is frequently easier to reach than a low one because a low goal exerts low motivational force. Some of the hardest jobs you ever accomplished actually seem easy simply because they were a labor of love.
Time Frame - A goal should be grounded within a time frame. With no time frame tied to it there's no sense of urgency. If I want to accumulate hundred thousand dollars, when do I want to achieve it? "Someday" won't work. But if I anchor it within a timeframe, "by Oct 1", then I've set my unconscious mind into motion to begin working on the goal.
Once we have determined the amount and time frame, then we are able to accurately access the kind of risk the client needs to undertake for his investments. If the client has a large amount to accumulate and has a short time frame, the client will need to take very high risk to achieve his goal. Vice versa, if the client has a modest goal over a long period of time, he will only need to take minimal risk. Thus it is important to find out how much and when the client needs to accumulate, as it is important not to take unnecessary risk in investments.
Life Goals
Money is not an end by itself. It is a means to an end. When I think of myself of a millionaire, I do not just imagine the figure $1,000,000 in my bank account statement. Rather, I envision the things that the million dollars can bring me, either material or non-material. I dream of my happy family, living in a spacious and luxurious home, driving around in my dream sports car, having good food, enjoying good health, favor with friends and loved ones, etc. Nothing about money, but money is the tool to enable my dreams to come true. I believe it is the same for you too.
Thus when we plan for our investment goals, we also need to link it with our life goals. What do we want the money for? For our marriage? For our children’s education? To buy a Ferrari? To start a charitable organization? We need to prioritize our life goals, as we have limited resources. Which is more important? Having a Ferrari or sending our kids to a reputable school for his future? This boils down to what our innermost values and desires are. Values are deeply held beliefs that are deep in our heart. For example, my number one value is family, so I will make sure I spend quality time with my family and that my family has comfortable lifestyle. If I regard fame as important, I will achieve wealth and publicize my success, so as to get the recognition of others. What are your values in life?
Thus the formula for accurate and powerful goals will be:
Step 1: Discover our innermost values
Step 2: Establish and prioritize our life goals according to our values
Step 3: Determine how much financially we need to achieve those goals
Therefore, having a general and vague goal for this coming year is not enough. We need to discover our most heartfelt values and prioritize our goals. Then we need to establish SMART goals that is specific, measurable, attainable, realistic and with a time frame. When our goal is clear, it becomes real and ‘tangible’ in our mind’s eye. We can then feel the excitement and passion in achieving the goal which will then produce daily discipline to do the things that will lead us to the goal. Nothing will seem impossible for us then.
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