We kicked off the year with Five Secrets of Successful Investors and I promised to elaborate on each one, providing additional context and action steps. One of my favorite mantras that I’ve carried over from my days as a financial advisor is that it’s not always what you own, but why you own it, that counts.

Navigating the Clutter

We live in a world where there are countless options when it comes to investing, from individual stocks and bonds to exchange traded funds (ETFs) and more. We all appreciate having a wide variety of choices, but sensory overload sets in fast if you don’t have a goal in mind. A random collection of investments does not an investing plan make.

This is where investing with a purpose comes in handy. For example, I am admittedly somewhat delinquent when it comes to figuring out how I want to allocate my daughters’ 529 plans. I think it stems from the fact that they’re growing up much too fast. However, the thing that motivates me to put a plan in place is knowing that I’m investing for their future, laying the groundwork for their education. This makes the investment selection process much easier – I just have to keep focusing on the end goal.

Steps to Stay Focused

I modified a well-known management acronym, SMART, to fit my investing goal setting guidelines. Here’s the breakdown:

Specific: Write down your goals. Have you ever noticed that anticipating the packing process for a business trip can be somewhat stressful, but the minute you write down a list of what you need to bring, it seems a bit less daunting?  It works the same way for your investments. Jotting down “Retirement at Age 70” or “Help Ava Pay for College” gives you a tangible objective.

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