Chapter 2

Taking Stock of Your Current Financial Situation and Goals

In This Chapter

arrow Preparing your personal balance sheet

arrow Looking at your cash flow statement

arrow Determining your financial goals

Yes, you want to make the big bucks. Or maybe you just want to get back the big bucks you lost in stocks during the bear market (a long period of falling prices) of 2000–2002 or perhaps in the infamous global financial crisis of 2008–09. (Investors who followed the guidelines from previous editions of this book did much better than the crowd!) Either way, you want your money to grow so that you can have a better life. But before you make reservations for that Caribbean cruise you’re dreaming about, you have to map out your action plan for getting there. Stocks can be a great component of most wealth-building programs, but you must first do some homework on a topic that you should be very familiar with — yourself. That’s right. Understanding your current financial situation and clearly defining your financial goals are the first steps in successful investing.

Let me give you an example. I met an investor at one of my seminars who had a million dollars’ worth of Procter & Gamble (PG) stock, ...

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