How do you know if you’re “doing well” when it comes to your financial plan? For too many people, the first thing that comes to mind is how their portfolio is doing. That might have something to do with every other financial headline tracking today’s market performance…
Do we want strong returns on your investments? Absolutely! The problem is when we make portfolio growth the #1 measure of success, but we aren’t focusing on what is needed personally to live a financially secure life.
We need a clearer, healthier definition of success when it comes to our financial plan – especially one that doesn’t fluctuate with the daily movement of the stock market. Exhausting, even for an advisor.
Today, we’re breaking down a key phrase you may hear us use instead: “Goal-oriented, progress-driven.”
Understanding Goal-Oriented Investing
Financial planning without clearly defined goals is like using Google Maps without a destination. If our goals are focused on portfolio growth, it’s like focusing on avoiding traffic. Avoiding traffic is great, but it’s not much good without a clear destination.
That’s why we want our clients to measure success primarily by progress toward their personal goals. When we talk about being "goal-oriented," we're not just looking at the next quarter or even the next year. Our focus is firmly on the long-term horizon, which means:
- Around what ages would you like the option to retire?
- What kind of lifestyle do you want to live in retirement?
- Where and with whom would you like to spend your time?
Something great happens when we figure out what we want our financial future to look like (give ourselves permission to dream). We now have an endpoint that lets us reverse engineer the path to success. How we live today is now aligned with the path we want to take.
One additional note: by keeping our eyes on the distant horizon, we can navigate the short-term ups and downs of the market with more confidence and less stress.
The Clarity of Progress-Driven Strategies
The reason we include “progress-driven” in our definition of success is that we can know we are on the right track. So much financial stress, even for disciplined savers, comes from not knowing where we stand on the path to financial independence.
With our long-term goals in hand, we can establish benchmarks that help us measure progress in a meaningful way.
This includes investment performance, certainly, but it also accounts for things we have more control over, like savings rate. Are we stewarding the factors in our control?
Checking in on your progress-driven plan can give you incredible peace of mind. More importantly, it can tell you when you need to catch up. (The #1 mistake in retirement is not having enough.) It can also tell you when you’re ahead of schedule and may have more options available than when you first began the planning process.
Either way, progress toward your personal financial goals is a far more important metric than how your portfolio is doing at any single point in time. Consistent evaluation allows us to stay on track and make informed decisions, rather than reactive ones based on market volatility.
Creating a Confident, Clear Plan
A goal-oriented, progress-driven plan changes our relationship with our money and our future. When we identify our long-term destination, we can begin to better prevent:
- Impulsive, unwise financial choices
- Emotional, reactive investment decisions
- Anxiety from not knowing how we’re doing
Instead, we gain a sense of clarity. We can focus on the potent factors that are within our control, leveraging the power of the markets without focusing all of our attention on them.
Remember, investing is a marathon, not a sprint. And with a goal-oriented, progress-driven approach, we can help you cross that finish line with your financial dreams intact.
Need to update your financial plan? At Courage Korving Miller Partners, we take the time to understand what’s important to you and your picture of the future. We’ll help you clarify your goals and chart a progress-driven path to get you there.