What are your challenges?
At the same time you’re probably wondering if you’re going to be able to retire. You might even wonder whether you can afford to put your children through school. How about that winter house you want? You get the idea. You have major expenditures in your life. You probably don’t save for them individually. You probably just save and hope there’s going to be enough.
Start with a plan.
Yea, I get it. You might be getting tired of me talking about savings that start with a plan. It might even be more than a little repetitive. At the same time without a plan that tells you what you need, how will you know when you arrive?
For most people savings for savings sake just doesn’t work. Behavioral economists will tell you that those who have a plan and a specific goal are more likely to be able to afford what they want.
Here’s an idea that might help.
Instead of just saving, what would happen if you started to save for specific things? When you set up your plan you can put together specific goals for large purchases you might want.
If you need a new car, start a fund. If you want to send your children or grandchildren to college, put money away for that specific activity. If you want a winter home away from the cold……..well, you get the idea.
What do you think the results might be?
Instead of just saving what do you think would happen if you decided to start different accounts that were labeled with the goals you had? You might also find that different wants come with different time frames.
Do you think you might want to use a different investment strategy for something that’s going to happen three years from now versus something that is twenty years off? The further out something is, the more you have to consider inflation. The closer something is to today, the more you have to think about market volatility. Considering these issues as a good reason to have different pots for different saving activities.
Set up different accounts.
The easiest way to do this is to set up different investment accounts. Label them with whatever your goal is. If the account is to buy a winter home, call it winter home account. If it’s to send your children to school, label it college fund. If it’s a once in a lifetime vacation, well you know what to label it.
Work with your investment manager to set up an appropriate investment strategy for each of your goals. Research shows that those who do this are more likely to achieve the outcomes they want. Doesn’t this sound like a good idea to you?
We have a special report on the basics of investing. You’ll learn some interesting things about how you invest and strategies you could use.