Planning is the Key to Goal Achievement
I recently had the pleasure of joining my clients for the christening of their new boat. It was one of those rare experiences when you can share the moment as a lifelong dream comes true. This dream was a long time coming and was the result of a lot of hard work and planning.
One of the first things we do when we begin a new relationship with a client is discuss their needs, their goals, and their dreams. These conversations are a lot of fun (and occasionally unrealistic, and they act as a guide as we help our clients organize their finances and think about what needs to happen in the coming months and years to make those dreams reality.
Much of financial planning is fairly mundane stuff, like making sure our clients have enough insurance or that their beneficiary designations are correct on their retirement accounts. These details are important because we don’t want something silly and avoidable to come between our clients and their dreams.
When it comes down to specific goals, like buying a home or a new boat, we often work to design a savings plan to reach that objective. If we have several years to do this, we can invest aggressively in the hope that we can earn higher returns and have more money to work with later on. Retirement savings is an example of this kind of a long-term saving and investing strategy.
We began working with this client about six years ago. From the beginning, they told us that their dream was to get the kids into college (fully funded), sell the business, buy a boat and sail off into the sunset. Our job was to help them think about what this would look like, project their income and expenses over the coming years and help them start thinking about what would need to happen along the way to make this dream a reality.
We discussed what the kids would need to pay for their college expenses. We discussed preparing the business for sale and how their investments could provide income over the years to help support them. As we kept up these conversations, things began falling into place. Along the way, our clients identified the boat they would want for their travels, and we helped them to project how this would impact their income, expenses, and savings, and helped them to get comfortable with the huge financial outlay they were about to make.
Once this was all settled, they started to save up for the payments that would be required. There would be three progress payments over a period of about three years. Because the time frame was relatively short, we agreed that it would be inappropriate to take any risk with these funds. When you have a big check that you know will need to be written, you want to make sure the money will be there to fund it. Investing aggressively could bring you more money to work with, but if things go badly you can come up short as well. So we invested these funds very conservatively in securities that would mature as the payments came due, providing peace of mind that the funds would be there to make their dreams reality.
This really paid off in 2020, as one of the progress payments was due in the first months of the COVID pandemic when the markets were extremely volatile. Our conservative strategy ensured that the payments were there despite those ups and downs in early 2020, and that second payment went out on schedule, funded by a maturing Treasury Note.
As much as I like a good Disney movie, making your dreams come true isn’t about magic wands or fairy godmothers. In the real world, it involves organization, planning, adapting to change and often a lot of hard work. But the reward is that something you’ve always wanted can become real, and that’s a truly marvelous experience.
So, as you make your new years resolutions, remember that writing down your goal is only the first step, but the journey will be well worth it in the end.
This column is prepared by Rick Brooks, CFA®, CFP®. Brooks is Director/Investment Management with Blankinship & Foster, LLC, a wealth advisory firm specializing in financial planning and investment management for people preparing for retirement. Brooks can be reached at (858) 755-5166, or by email at rbrooks@bfadvisors.com. Brooks and his family live in Mission Hills.
Category: Business, Finance, Life Style, Local News
