Use Your Financial Strategy Like GPS
When you’re driving these days, it’s pretty hard to get lost because your smartphone’s Global Positioning System (GPS) can get you just about anywhere. And as an investor, you can have a similar experience by employing another directional tool – a personalized financial strategy.
Let’s look at the parallels between your GPS and this type of strategy.
To begin with, your GPS pinpoints your exact location at the start of your trip – in other words, it tells you where you are. And when you create a financial strategy, your first step is to evaluate your current situation by answering these types of questions: What are your assets?
How much do you earn? How much do you owe? How much are you contributing to your IRA, 401(k) or other retirement accounts? Once you’ve got a clear picture of your finances, you’ll be ready to begin your journey toward your long-term goals.
Once your GPS has identified your starting point, it will then show you where you want to go and the routes to help you get there. And it’s the same with your financial strategy – you want it to help lead you to a particular place in your life. In fact, a well-designed strategy can show you the steps you need to take to help reach more than one destination – to a place where you can send your children to college, a place where you can retire comfortably, a place where you can leave the type of legacy you want, and so on.
Here’s another element of your GPS that applies to your financial strategy – the warnings. You’re certainly familiar with those thick red lines your GPS shows to indicate traffic slowdowns ahead. And while they’re annoying, they’re also useful in cautioning you that you may arrive at your destination later than you had originally planned. Your financial strategy can also express “warnings” about events that could hinder you from reaching your goals. These obstacles might include an illness or disability that could keep you out of work for a while, or the need for some type of long-term care, such as a nursing home stay or the services of a home health aide. Your financial strategy can not only identify these threats, but with the guidance of a financial professional, suggest potential solutions.
In addition to providing warnings about things such as heavy traffic and road construction, your GPS can change your route if you miss a turn or if you decide, for whatever reason, to go a slightly different way. Your financial strategy can also show you alternatives, if it’s comprehensive and overseen by a financial professional, who, using specialized software, can create hypotheticals – illustrations that provide alternative outcomes for different steps, such as retiring at various ages, investing different amounts each year or earning different rates of return. These hypotheticals can be quite helpful to you as your chart your course toward your goals, especially if you need to change your plans along the way.
Your GPS and your financial strategy are two great tools for helping get you where you want to go.
This article is sponsored by Shawn D Wall, Financial Advisor for Edward Jones. You can contact them with questions or comments at (260) 747-5411 or 6110 Bluffton Road Suite 101 Ft Wayne, IN 46809. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC.
- Special Needs Trust Could Ease Families’ Stress - May 28, 2023
- Are Your Goals ‘Must Have’ Or ‘Nice To Have’? - May 12, 2023
- A New Law May Offer Financial Opportunities - April 28, 2023