Turn your intent into
a commitment.
Goals give you focus. To find and establish your investing and saving
goals, first ask yourself what you want to accomplish. Do you want to build an
emergency fund? Build college savings for your child? Have a large retirement
fund by age 60? Once you have a defined motivation, a monetary goal can arise.
It can be easier to dedicate yourself to a goal rather than a hope or a
wish. That level of dedication is important, as saving and investing usually
comes with a degree of personal sacrifice. When you dedicate yourself to a
saving/investing goal, some positive financial “side effects” may occur.
A goal encourages you to save
consistently. If you are saving and
investing to reach a specific dollar figure, you likely also have a date for
reaching it in mind. Pair a date with a saving or investing goal, and you have
a time horizon, a self-imposed deadline, and you can start to see how you need
to save or invest to try and achieve your goal, and what kind of savings or
investments to put to work on your behalf.
You see the goal within a larger
financial context. This big-picture
perspective may help you from making frivolous purchases you might later regret
or taking on a big debt that might impede your progress toward reaching your target.
You see clear steps toward your goal. Saving $1 million over a lifetime might seem daunting
to the average person who has never looked at how it might be done
incrementally. Once the math is in place, it might not seem so inconceivable.
The intimidation of trying to reach that large number gives way to confidence –
the feeling that you could realize that objective by contributing a set amount
per month over a period of years.
Those discrete steps can make the goal
seem less abstract. As you save and
invest, you may make good progress toward the goal and attain milestones along
the way. These milestones are affirmations, reinforcing that you are on a
positive path and that you are paying yourself first.
Additionally,
the earlier you define a goal, the more time you have to try and attain it. Time is certainly your
friend here. Say you want to invest and build up a retirement fund of $500,000
in 30 years. If you save $500 a month for three decades through a retirement
account returning 7% annually, you will have $591,839 when that 30-year period
ends. If you give yourself just 20 years to try and save $500,000 with the same
time frame and rate of return, you may need to make monthly contributions of
about $975. (To be precise, the math says that over two decades, monthly
contributions of about $975 will leave you with $501,419.)1
When you
save and invest with goals in mind, you make a commitment. From that commitment, a
plan or strategy emerges. In contrast, others will save a little here, invest a
little there, and hope for the best – but as the saying goes, hope is not a
strategy.
Taylor McClish may be reached at (503) 239-3060 or Taylor.McClish@cunamutual.com
This material was prepared by MarketingPro, Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates. This
information has been derived from sources believed to be accurate. Please note
- investing involves risk, and past performance is no guarantee of future
results. The publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to engage
the services of a competent professional. This information should not be
construed as investment, tax or legal advice and may not be relied on for
avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.
Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC,
a registered broker/dealer and investment advisor. CBSI is under
contract with the financial institution to make securities available to
members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.
Citations.
1 - bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx
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