More Straight Talk on Investing

3A Map to Success: Hmm, Sounds Like a Plan

Legendary baseball catcher Yogi Berra once said, “You got to be very careful if you don't know where you're going, because you might not get there.” Although Yogi wasn't likely talking about investing, the quote hits the mitt right on target. Having a plan will help make your financial life less burdensome and more gratifying.

Developing a financial plan need not be complex. It entails looking ahead and assessing where and when your needs for money will occur. Then you decide how you're going to meet those needs. It's essentially a three-step process:

1. Determine how much money you'll need for your goal(s).
2. Determine the mix of investments that should provide you with that targeted amount.
3. Determine how much you need to set aside in order to reach your goals.

If you're like most people, you have more than one investment goal. For nearly all of us, a secure retirement is the largest goal in terms of the amount of money required. It's also the one for which you have the longest time to achieve. But other needs may be more immediately pressing, such as a down payment on a house or a child's college education. In addition to your primary goals, you'll need to have a plan for meeting rainy day needs—the unexpected financial hurdles that life has a way of putting on your path.

In this chapter, I'll share some financial planning tips based on lessons I learned from my own experience and from the thousands of successful investors I've talked ...