The last few weeks reignited fears that our wealth will disappear in the stock market. In fact, many people have been wondering how they can meet their long term financial goals if every asset class seem to be losing value.
For those still pondering, I want to point you to an idea that I just heard on TV – the one page miracle.
The idea is basically for you to write down your goals for your health, wealth and relationships. Everyday, you read through the page and ask yourself one question. Is what I’m doing getting me closer to my goals?
If we apply this to our financial situation, we will realize that:
- worrying about our wealth doesn’t make the list
- hoping that stock prices would magically go back up doesn’t qualify
- neither does complaining to everyone and their pets about what your net worth was at the end of 2006.
Worrying for Nothing
Let me tell you that I’m not somehow immune. I sometimes hope that my 401k balance will go back up. I worry about whether I can afford to buy a house someday and I worry what living in America will mean as we ratchet up our debt on a national scale when the problem originated from excessive borrowing at an individual and corporate level.
I do realize though that doing all that doesn’t help me one bit in reaching my goals, so let’s just stop that. Let’s work on it together and stop worry, hoping and complaining okay?
Doing Something About Your Financial Goals by Going Back to the Basics
If you are still with me by this point, start by doing a few of the following about our money.
Instead of worrying,
- Figure out an asset allocation plan that makes sense for your time horizon that doesn’t take into account recent performance (ie have a long term view if you have years to go before retirement).
- Put together how (and how often) the portfolio will be rebalanced.
- Determine how future income will be added to your portfolio.
- Write it down and stick to it.
Pretty basic and nothing you haven’t heard of huh? The bad news is that most of you have never put a plan together even though money relates to so many facets of your life. The good news? There is absolutely nothing complicated about it because otherwise, no one could ever get it right.