Investment questions as financial planning questions in disguise

Our goal is to help people make good decisions about their personal finances. And, as I say when I first meet a potential client, our best clients call saying “I am thinking of ….” while our toughest clients call saying “Guess what I just did…”

The article below from Morningstar emphases the need to do the analysis of your goals in order to make good financial decisions – in other words, getting advice and creating a financial plan that you implement over time, including answering investment decisions, especially in these tough times.

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Planning Questions in Disguise

I spent last week answering questions for investors on the new Bucks Blog at The New York Times. It was an interesting reminder of the vital role of a real financial planner and the ongoing process of planning.

Almost every question I answered should have been answered by saying: “Find a real financial planner, tell them everything, and do what they say.” Of course, you can’t do that over and over because no one will listen to you, but boy, it was tempting.

This experience got me thinking about a couple of questions:

1. How can you make reasonable investment decisions without an overall plan?
2. How do you decide when or what to invest in without any context?

Can you imagine visiting the doctor and getting a prescription before a diagnosis (and feeling good about it)? Why do we expect anything different when it comes to investing?

I guess it is because people are confused about the goal. Finding the best investment is not the goal. Having the money to send your kids to college or retire on your own terms is a goal. If finding the best investment is the goal, you may not need a plan. Then, you are left with some really hard questions about market-timing and stock-picking. Good luck.

But if the goal is to reach your financial goals given a certain set of resources, then the questions of what investment or when, can only be made within the context of those goals. All this got me thinking about how many investing questions are really planning questions in disguise, and how many of these questions go away with a real planner involved.

Let us know if you have questions or comments. Thanks,