Chapter 3. Funding Your Financial Plans

In This Chapter

  • Covering your bases before investing

  • Meeting your goals with the help of mutual funds

In this chapter, I explain how to fit mutual funds into a thoughtful personal financial plan so the mutual funds you invest in and the other personal finance decisions you make help you achieve your goals.


One thing to remember before you dive in: Don't become obsessed with making, saving, and investing money that you neglect what money can't buy: your health, friends, family, and exploration of career options and hobbies.

The Story of Justine and Max

Justine and Max, both in their 20s, recently married and excited about planning their life together, heard about a free financial-planning seminar taking place at a local hotel. A financial planner taught the seminar. One of his points was, "If you want to retire by the age of 65, you need to save at least 12 percent of your income every year between now and retirement . . . the longer you wait to start saving, the more painful it'll be."

For the couple, the seminar was a wake-up call. On the drive home, they couldn't stop thinking and talking about their finances and their future. Justine and Max had big plans: They wanted to buy a home, to send the not-yet-born kiddies to college, and to retire by age 65. And so it was resolved: A serious investment program must begin right away. Tomorrow, they'd fill out two applications for mutual fund companies that the financial planner had distributed to ...

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