The Discerning Investor by Julie Jason

Invest in Planning for Financial Success

It seems there is a special day for just about everything you can think of. As I write this column (Oct. 2), it’s National Name Your Car Day -- and, yes, I’ll admit to naming my first car a long time ago.

But that’s another story.

It happens that Wednesday, Oct. 7, is World Financial Planning Day, sponsored by the Financial Planning Standards Board and the International Organization of Securities Commissions (IOSCO).

Since planning is the bedrock of successful investing, what better time than now to review some planning basics?

Based on years of experience working with families, I would do some homework first. Start with getting a handle on your income and living expenses (your household cash flow) and your assets and liabilities (your household net worth).

Then, do some thinking about what you want your future to look like.

For guidance, I recommend exploring a free resource called Smart Investing, which you can find at tinyurl.com/yxhg6bxm. FINRA, the Financial Industry Regulatory Authority, created the course. FINRA regulates the financial services industry.

Let’s go through some important personal finance concepts, as set out by Smart Investing:

Set your financial goals. You can’t have a plan without establishing goals. FINRA recommends setting time frames first:

1. Identify your most important short-, medium- and long-term financial goals.

2. Estimate how much each of your goals will likely cost.

3. Set up separate savings or investment accounts for each of your major goals.

4. Choose investments suited to meeting each of your goals based on your time frame and your tolerance for risk.

For Step 1, FINRA suggests three time-frame categories: short term (less than three years), midterm (three to 10 years) and long term (more than 10 years). You can read more about that here: tinyurl.com/y54qdftc.

For Step 2, you’ll need some help estimating the cost of future goals, such as college and retirement. FINRA’s calculators at tinyurl.com/y2af7m2e can help.

Step 3 is straightforward. Step 4 will take some studying if you are a new investor. FINRA’s Learn to Invest site (tinyurl.com/rp3uken) is a great starting point, providing interactive modules called Smart Investing Courses that include topics like Setting an Investment Goal, Risk and Return and Diversification.

There are a few other resources that you’ll want to explore. For help with calculating net worth, see FINRA’s sample net worth worksheet at tinyurl.com/y2mfggmb. For calculating cash flow, see FINRA’s sample worksheet for tracking your monthly income and expenses at tinyurl.com/y6cdllvx.

As you can see, planning starts with assessing your current situation, followed by looking into the future. I’m a firm believer in corralling that future into time segments, as FINRA suggests. That makes the planning process much more manageable. The plan has to be in place before even thinking about how to make investment decisions.

Understanding financial basics and creating a solid plan is the foundation for making those decisions. There are many other resources for personal financial planning information. I do favor regulators such as FINRA as resources, as my regular readers know. We’ll explore other financial planning resources in future columns.

In the meantime, do reach out to me with questions and comments at readers@juliejason.com. And, if you have an interest in “talking” about some of these subjects, I invite you to attend a free online class sponsored by the Greenwich Library. You can register for “Investment Basics III: Research Tools,” which will be held Wednesday, Oct. 14, at 10:00 a.m. EDT, at tinyurl.com/y55jakjq, or contact Yang Wang, 203-622-7924, ywang@greenwichlibrary.org.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION