Good Financial Reads: Tying Your Goals to Your Finances

Stocks and bonds make the foundation of most investor’s portfolios. Most investors intuitively understand that the split between stocks and bonds represents the risk-return tradeoff they are willing to make with their savings. A higher allocation to stocks means potentially higher returns but also a greater risk of large losses.

Setting goals is an efficient way to accomplish almost any task.  Ask any athlete, sport or life coach, teacher, or financial advisor. In financial planning, meaningful goals are the emotional payoff that helps us delay gratification and stick with our plan to achieve what really matters to you.

A big concern for people seriously thinking about retirement is whether they are on track for the retirement they want. The question is particularly relevant today as financial gurus talk about a possible new normal, with low-interest rates potentially indicating low future returns. Consider this situation: You set a goal, estimate your annual savings towards retirement, and have a target year in mind. You use a retirement calculator and find that at the current rate of savings, you fall short of your goal. What do you do?