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Investor, Do You Know Where You Are Going?

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to,” said the Cheshire Cat.

“I don’t much care where…” said Alice.

“Then it doesn’t matter which way you go,” said the Cat.

“…just so long as I get SOMEWHERE,” Alice added as an explanation.

“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”

~ Lewis Carroll, Alice in Wonderland

This discussion from Alice in Wonderland says a lot about how we keep trying (keep walking) when we are aiming to get somewhere, or achieve something, in life (like financial freedom).

But then, let me ask, when it comes to your financial and investing life – “Do you know where you are going?”

Do you have a clear vision, a picture in your mind of your ideal financial future, pulling you forward and inspiring you to act now?

One of the above quotes points out if you only walk long enough, you will get to somewhere.

So my second question is – Is somewhere good enough? Is somewhere where you want to go?

Have you created a series of financial goals that you want to achieve over the next 3, 5, 10, and 15 years…and which allow you a periodic measure of your incremental successes to keep you motivated, energized and on-track.

Or, are you allowing the daily activities in your life or your financial advisor’s advice to dictate your direction, and by default, define your financial destination (that ‘somewhere’ place)?

Know where you’re going
I am often asked my advice on how to start investing and the best approach to get success as an investor.

Before I encourage the questioner to jump into problem-solving mode, my response is always the same, “What would you like the outcome to be?”

As the Cheshire Cat says, “If you don’t know where you are going, any road will get you there.”

Although it sounds simplistic to say that you should begin with the end in mind, the honest truth is that you MUST indeed begin with the end in mind to create a strategy for your financial success.

Everything you do – like the kind of stocks or mutual funds you pick – must pass the acid test of aligning your actions to your financial goals.

May I help you?
Someone famously said, “May you have the hindsight to know where you have been, the foresight to know where you are going, and the insight to know when you have gone too far.”

If you’d like to talk about where you want to go in your financial life, I look forward to hearing from you.

If you have yet to make the decision of where YOU want to go in your financial life, I ask you to take the time NOW to discover and develop your vision.

Imagine yourself holding a box, which has a perfectly complete picture (of your ideal financial life) on the outside, and your life’s puzzle pieces inside.

The pieces are all inside, certain to fit together to create your ideal financial life.

If you’d like some help fitting them together – i.e., you want help in realizing where you want to go in your financial life, and how you can go there – just write to me!

I love puzzles. How about you?

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. This conversation in Alice in Wonderland is very philosophical.
    For a financial road map, I think a spreadsheet (assuming one is familiar with Excel) is a good starting point.
    Start with cash inflows (income + returns on investment ) and project outflows (expenses + education + contingency + house + travel + marriage etc) and it (financial planning) should start to make sense to a person.
    The difficult issues anyone will face when making such a sheet are that while the first one (inflows) is still somewhat predictable it is outflows which change mainly due to external factors plus change in needs (like another house, bigger car etc).
    So the crux is as was mentioned in a previous article ‘keeping needs simple’ and ‘investing and then spending what is left, instead of the other way around’.
    Simple things to state but very difficult to implement.

    • Thanks for your comment, Sudhir! 🙂 You said it all! As the post suggests, it’s very important for one to know where he wants to go in his financial life, and then work backwards (the means). Also, as you mentioned, implementation (though difficult) remains the key.

  2. Inflation is another big spoil sport, infact the biggest. It is akin to meeting a robber every few miles when out on the silk trade route. Scams and unscrupulous promoters (including the Govt as a promoter) make it worse.
    In fact I feel all asset classes (in varying proportion based on ones risk appetite) equity, gold, debt, real estate and you yourself (skills and development) are the key. Real estate may be a class which cannot be ignored, but is very risky and bulky.

    • Yes, it is this ‘inflation demon’ that makes investing in low-yield debt and other instruments (which are usually termed ‘safe’) highly unsafe in the long run. I believe the best way for an investor to counter inflation from eroding his purchasing power in the long term is to own stocks – companies with pricing power and the ability to withstand the rigors of business cycles with relative ease.

      Real estate and gold are other good options, but again it is important to stay awake to any speculation in their prices and not go overboard.

  3. Actually, Vishalji, you should have included a spreadsheet for Financial planning in your workshop, along with DCF and formulae that we discussed about.
    I have been maintaining a simple spreadsheet, got this inspiration from Sal’s video of balance sheets. In one snapshot, I know what are my assets, what are my liabilities and what is my networth/equity. Assets include all my investments in MF, Stocks, Bonds, PPF, Gold, Cash, Fixed Deposits, Loans given to relatives (with the hope that I will get it back :-)), if you own a house, that will go here too.
    Liabilities include my credit card outstanding. That’s the only liability I have month to month, which I repay without fail.
    Equity/Network = Asset-Liabilities
    This way every month I update my investments, income, cashflow, etc and I know exactly where I stand. Individual sheets also show how much MF has returned so far, how my stocks are doing etc.
    If one wants, you can also include a workbook that shows your goals, years to achieve and your monthly investment to meet them. This will give you an idea if you shortfall.

  4. Krishnendu Ghosh says:

    Dear Vishal,
    I had been following your post for quite sometime now and have registered myself with your newsletter. Your explanation on the early savings theory is indeed good; but what to do in cases where someone like me has lost the time by about 14 years. It is not that I didn’t save, but the financial commitments towards medical expenses for my late father’s treatment has been so high, that my savings have completely eroded, leaving me crippled as of now. I am trying to build up again and doing in my own way; although a little help from you in terms of guidance would be a BIG welcome. Can I share my investments / holdings and other family commitments, so that I can plan properly my investment decisions (within the means of my limited income) after sharing with you.
    Please let me know, if I should write a mail or send you an excel sheet alongwith the goals I want to reach to.
    I do not mind paying for the professional advice that you would share.
    Thanks for reading this far.
    Krishnendu Ghosh

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