Looking back to look ahead – a checklist for future financial successDecember 14, 2004
Famous baseball pitcher Satchel Paige made his final major league start in 1965 at age 59. When asked the secret of his very long and distinguished career, Mr. Paige said, “Don’t look back. Something might be gaining on you.” That philosophy certainly worked well for the great hurler, but when it comes to personal financial management, looking back can be the key to success in the years ahead. Here’s how a ‘looking back’ checklist can help improve your financial lookout in 2005 and beyond.
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Looking back – what I did in 2004 |
Looking ahead – what I will do in 2005 |
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n Tried to manage my money, but ended up overspending on impulse items and under-investing in my future. |
q Set a budget and stick to it. I can’t save or invest if I don’t have the money – so I will take a critical look at my income and expenses and set a realistic monthly budget that also includes amounts for savings and emergencies.
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n Had good intentions about investing on a regular basis, but my investment dollars often got ‘gobbled up’ by other things. |
q Start an automatic investment plan. It’s an easy way to invest an equal dollar amount – say $100 – each month and to take advantage of dollar-cost averaging, a proven investment technique that allows me to buy more securities of a mutual fund, for example, when the price is low and fewer when it’s high. That way I’ll enjoy a reduction in the average price I pay for my total investment.
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n Meant to add to my RRSP contributions last year but missed the deadline. |
q Maximize my RRSP contributions this year – and every year. By starting early and making maximum contributions I will get the most in tax-saving/tax-deferred benefits from my RRSP. More money invested at regular intervals can mean faster RRSP growth and a bigger nest egg when I retire.
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n Spent a lot of time switching in and out of investments seeking the best returns, but ended up with a disappointing portfolio performance. |
q Drive my portfolio by looking forward, not back. Market studies clearly show that buying and selling based on short-term market fluctuations usually doesn’t pay off. A proper asset allocation plan, and staying invested, are the keys to steady long-term growth in spite of inevitable market cycles.
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n Some of my investments were extremely volatile and that kept me awake many nights. |
q Build a portfolio that matches my tolerance for risk. A portfolio, carefully constructed within a sound asset allocation plan, includes a diversified selection of assets from the three asset categories – cash, fixed income and equity – that smooth out peaks and valleys to deliver the full financial benefits of the market. My portfolio should meet my time frame for achieving my financial goals and let me sleep at night.
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Life changes us and our hopes and dreams for the future. The key is to start with a critical assessment of your current finances and life goals and develop a realistic plan that matches them. Then, by periodically looking back to see how things are going, you can look ahead and revise your plan as your financial situation and goals change. A professional financial advisor can help make sure you stay on track to achieve your dreams.
This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.
