Sunday, July 25, 2021

What is your Financial Goal?

Wealth Management - Weekly column by Kurt F. Matthew, Jr., retired financial adviser and private equity investor in Palm Beach County.

“Think, believe, become!” – “You know you’re making progress in life when, what was once a destination, becomes a mere milestone along the way….” Kurt F. Matthew, Jr.

There’s a moment in life when you should stop and ask yourself: What is your Financial Goal? This is the first, in a series of weekly thoughts, strategies and hopefully actionable ideas, based on my professional training and daily-life experiences in investments, family financial management, retirement planning, estate planning and wealth-building, that will guide you into answering that question accordingly.

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Regardless of your level of financial literacy, economic position or demographic profile, there are some words or concepts that we have all encountered in our daily lives: savings, wealth, retirement planning, and personal budgeting/expense management.
Before we delve into all things financial, including investment strategies, here are a few relevant statistics, which should allow you to see where they stand at this point in time, compared to your peers.

1. $121,000: “average” American’s net-worth (excluding primary residence). Compare this to the fact that each member of the top 1% of the US population has an average net worth of $8.4 million (1)

2. $56,335: “median” American household’s net-worth (excluding primary residence). This contrasts with the top 5% of the US population whose median household net-worth is $1.4 million (2)

Based on the above statistics, how do you compare with your fellow Americans?

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What is your Financial GoalWhat is your (and your family’s) financial goal?:
(a) Plan for a modest retirement?
(b) Create significant wealth? If so what dollar amount much?
(c) Grow your existing wealth?
(d) Wealth preservation / simply protect what you have?

Regardless of your goal, you need to incorporate into your planning seven key concepts:
1. At what age do you (did you) begin planning your financial future (investment horizon)?
2. What percentage of your annual income should you save (savings rate)?
3. How do you make investment decisions: are your investment choices self-directed or managed by others, if so how qualified are they (portfolio management)?
4. How do you position your investments, so as to achieve the optimal risk/reward mix (asset allocation)?
5. Do you take advantage of the power of compounding – “my wealth has come from a combination of living in America, some lucky genes and compound interest” Warren E. Buffett (billionaire investor)
6. Does each family member play his/her part in sticking to the financial plan that you mutually agreed to (teamwork)?

It is a fact, that many of us spend more time planning our vacation trips, than we do planning our financial future. As of today, let us put this shortcoming to rest and give our future the care and attention it deserves.

While you reflect upon what we have covered so far, here is some literature that promises to provide you with guidelines, to assist you on your financial journey.

Recommended Reading

• “The Intelligent Investor” (Benjamin Graham)
• “The Millionaire Next door: The Surprising Secrets of America’s Wealthy” (Thomas J. Stanley)
• Berkshire Hathaway shareholder letters that have been written, over the past fifty years (Warren E. Buffett)

“The secret of getting ahead is getting started.”  Mark Twain

What is your Financial Goal? These are Advises that will Assist You in Answering this Question. Learn How Start to Plan You and Your Family’s Final Goal Now

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