Points to Remember

Analisa's Financial Plan

Analisa Dee Simon

Age: 35
Occupation: Tourism Development Manager

“If you don’t know where you’re going, any road will take you there. I don’t know who said that, but we can all recognise it as true. So my tip for early investors is to create a clear, detailed financial plan. And my reminder for the more experienced investor is to review your financial plan annually.

With respect to the creation of your financial plan, I would keep the issues of diversification and weight allocation and stocks vs bonds and hedge fund performance etc etc out of the discussion because what’s going to drive your plan is not the mechanics of your investment but their purpose in your life. And their purpose isn’t ‘to make you rich’. When you’re facing a stock market downturn or you’re experiencing some personal life stress that affects your finances, to keep on course with your plan I can guarantee you’re going to need a target that’s more defined and infinitely more tangible than ‘being rich’.
The actual investment vehicles you choose should only be the highway and your specific long-term objectives (for example: retirement at 55; 9 million dollar nest egg; further education financing; sending three children to university) are the destination.”



Your plan will define your life goals and attach an investment time frame to them. The clearer and more detailed you make your plans, the easier it will be to stay on course during stock market downturns – or even during stock market bonanzas where every new investment seems like a sure-fire, millionaire-making one.
What is a clear, defined goal?

“I want to retire rich.”
Is the above goal specific?
No. Amongst other questions, when do you want to retire?
“I want to retire rich at 55”
Is the above goal measurable?
No. How do we define ‘rich’? Without this definition, we’ll never know if you reached the goal or not.
“I want to retire at 55 with liquid savings & investments valued at $20 million”
Is the above goal realistic?
The answer will depend on your current situation and conservative projections. If you’re 40 years old investing $100 a month in a money market account with a 7% yield, no it’s not realistic.

At age 55, I want to begin a comfortable retirement. I want to be able to travel the world with my partner in first class accommodations, I would like to own a holiday home in Spain, I plan on donating 1% of my net worth to charity and I want to follow the West Indies cricket team on all their test series.

To properly execute all of my retirement plans, I need to have accumulated savings & investments of $20 million at the date of my retirement. As at today, X/X/08, I have $800,000 in savings and a current investment portfolio value of $3 million. I am 42 years old.

I must apply myself to the continued development of an aggressive growth portfolio in order to achieve my goal.