Achieving Financial goals needs Discipline and Focus

In my business as a financial advisor, I have observed one thing and this disheartens me. People set goals for long term, and they also continue with investments till the end, yet sometimes they fail to achieve the desired corpus which was projected at the start of their financial journey.

You must be wondering, why?

You might be thinking that may be I do not know my job well....

Before you make any judgments, I want you to go through this complete article and then decide why it happens? How it happens and what goes wrong?

Usually when I meet a prospect and discuss with him what his/her or their short term, mid-term and long term goals are, they tell me their various financial goals. Once they give their list of the financial goals and the number of years in which they wish to achieve them, I take into consideration various other important factors viz; their income levels, current liabilities, expenses, current investments, their risk appetite etc.

Once armed with these details I do some number crunching and some working and give them a picture of their current financial standing. Then with that as background I help them prioritize their goals and the order of importance. Sometimes I ask them to postpone some goal/s as their current financial situation do not allow them to go for them now.

Once we are in agreement with that, then I go back and return once again with a road map/ financial plan for them which will be able to help them achieve their desired goals. Sometimes they start the plan as it is, while at others we take a step up plan route.

Everything goes well for initial three to five years but then things change. Now that the money is growing their focus diverts. And since they are already seeing the money available in the portfolio, they express their desire to withdraw some amount from this corpus in order to fulfill their new fancy.

Nothing wrong with that. But what they forget is that the corpus is being made for a goal which is still ten or twelve or fifteen years away. Most of the time this far off goal is either higher education of their kids or retirement of their own.

When one withdraws money in between, the future of these long term plans gets affected. I bring this to their notice that doing so is not what I would recommend as it will hamper their long term goals, for which we did the whole exercise and started the plan in very first place.Some of them understand the point I try to make and do not disturb the plan, while others say that this present thing is more important. And that, since we still have time for that other goal we will refill the amount which will be withdrawn as we go ahead.

In most of the cases I have seen that the refill never happens. Because every now and then something or the other which they feel is more important comes up.

What they also ignore or disregard is the fact that when they withdraw the money before the desired tenure, the whole purpose of the financial planning gets defeated. Why?

Because when a plan projection is made we take into consideration various parameters.... returns and tenure being one of the main criterias in it. What it means is that if the amount which I suggest after applying various hypothesis and calculations is invested regularly without any interruption for a particular goal as per the tenure, only then can the goal be achieved. If one withdraws money in between, the returns gets affected and so does the whole calculations and the workings for the plan.

And even if the refilling is to be done it will need much bigger amount then the one which was initially calculated.

In wealth creation or financial planning one does not need more MONEY, one only needs more TIME. 

You cannot postpone your kid’s higher education because you do not have enough money. Can you? Yes, for once you may postpone your retirement, but then would you really would want that?

In my working experience of more than seventeen years as a financial advisor, this is what I have observed, analyzed and realized. Higher education of your kids, your own retirement, and your family’s health and financial security are your basic needs and they need to be covered first. Everything else can be added up later on when your finances allows that.

So my friends if you really want to achieve the financial goals you desire, please start investing as soon as you can, and once you start it please do not deviate from the plan.

Job of a good financial advisor is to come up with a realistic and workable plan for you, and then help you achieve it. Annual review, regular monitoring of your portfolio and making the necessary course corrections as and when needed is both his job and his responsibility. You just make sure that you follow the plan, keep the required discipline and stay focused on the goals that you want to achieve. And he will ensure that you achieve all your financial goals as smoothly as possible, without any stress :)