Short-term goals:
Paying for the expenses you anticipate in the next few years requires a cautious plan. You should focus on minimizing the risk to your assets and preserving your wealth. Make sure the money you’ll need in the near future is both secure and accessible.
Common short-term goals:
Buying a car
Making a down payment on a home
Taking a vacation
Returning to school for extra education and degrees
Getting married
Establishing your own business
Paying off credit cards, student loans and other debts
Possible investments for achieving short-term goals:
Savings accounts
CDs
Money market accounts
U.S. Treasury bills
Short-term bonds or short-term bond funds
Mid-term goals
Think about the next ten years, concentrating on what you hope to accomplish and the expenses you anticipate these goals will cost. Planning for mid-term goals means carefully balancing investment growth and financial security.
Common mid-term goals:
Paying for children’s education
Purchasing a larger home
Buying a second home or vacation home
Buying a boat or recreational vehicle
Traveling to a special destination
Possible investments for achieving mid-term goals:
Stock in a variety of companies
Stock mutual funds
Exchange traded funds tracking a diversified range of indexes
U.S. Treasury notes
High-rated bonds or bond funds
Zero-coupon bonds with appropriate maturity dates
Long-term goals
It is never too early to begin financial planning for the major financial goals you want to achieve more than ten years down the road. Realizing your hopes and dreams for the future calls for a persistent and growth-oriented investment strategy.
Common long-term goals:
Living comfortably during retirement
Affording travel and hobbies
Continuing to support your children
Financial security for long-term health care
Providing an inheritance for your heirs
Creating a legacy
Possible vehicles for achieving long-term goals:
Stock in emerging and developing as well as well-established companies
Stock mutual funds that invest in growing companies
Exchange traded funds tracking a diversified variety of indexes
Long-term bonds
Zero-coupon bonds with appropriate maturity dates
Re-evaluating Your Goals Over Time
Your financial goals will likely change as your financial circumstances change. That’s why it is important to reassess your goals periodically — and at least once a year. As you do your annual financial check-up, ask yourself the following questions and be prepared to make any changes you think are needed.
Are the goals on my list still the goals I care about?
Are there other things that matter more to me now?
Have I made financial progress since last year?
If not, what could the reasons be?
Am I using the best investments to meet specific goals?
What other choices might provide stronger results?
Am I giving each goal the attention it deserves?
Do I need to change my investment strategy on any of my goals because of a change in time frame?
List Your Financial Goals
Make a list of your primary short-, mid- and long-term financial goals, the approximate date when you hope to achieve them, how much you have saved already, approximately how much you’ll need and where your savings are. This list can serve as benchmark for evaluating your progress. Remember that it’s perfectly normal for your goals to change as your life changes.