Ok, so now we’ve hopefully got our finances under control by avoiding lifestyle inflation, and setting up a properly funded emergency fund. The next step is deciding on your long-term goals and the reason you are investing. Do you want to achieve financial independence early? Still retire in your 60’s but have more cash flow to travel? Save up for a child’s college expenses?
The answers to these questions are very important and must be considered when deciding to start investing. If you are in your 20’s and planning on retiring at age 65, you will be investing differently than say, a 40 year old preparing to send their oldest kid off to college in 5 years, or a 21 year old like me trying to reach financial independence by age 40.
Before you open a brokerage account and buy that first stock, take some time to figure out your long-term goals. Then you can create a plan for your investing actions that will allow you to achieve these goals. I’d recommend actually writing it down so it is more concrete and you can reference it later. This plan will keep you focused on achieving your goals through good economic conditions and bad. If you don’t have a plan, it is too easy to lose your way and get discouraged when you run into adversity (think 2009 recession 🙁 ).
Once you figure out your reasons for wanting to invest you can then start investing. I’ll be posting my investing plan that will allow me to achieve my long-term goals here soon.
What are your reasons for choosing to invest? Leave a comment below.
Yes I know most people/bloggers set their goals for the year back in January but since I just started here at the Starting From Zero Blog, here are mine for 2014. Better late than never right? 🙂
-Spend only 50% of my net income per month and save/invest the rest.
-Contribute the max to my Roth IRA ($5500 again in 2014).
-Get net worth up to $40,000. This will be a tough one to accomplish but might as well try to aim high for these things.
-Increase emergency fund to 7k up from 4500 (need to cover those new apartment costs and all).
-Receive $1000 in dividend income for the year.
-Expand my knowledge of REIT’s (Real Estate Investment Trusts) and MLP’s (Master Limited Partnerships) as alternatives to traditional dividend growth stocks.
-Complete 2 classes towards my Bachelor’s in Business Management (working 50 hrs. a week, I think this is a doable goal, 1 per semester).
-Read more. It seems like I used to go through several books each month. Lately it’s been maybe 1, sometimes none. Time to get back on track with that.
-Learn more about the technical parts of running a website. The writing seems to come fairly easy. The hosting part? Not so much. Self-hosting is way more different than the “Blogger” blog I used to run a few years ago.
-Get to 5% body fat by the end of 2014, currently around 8-9% (let’s go 6 pack 😉 ).
-Run a sub-10 minute 1.5 mile on my annual fitness test. Managed to do this for the first time last year and would like to maintain that.
-Bike more instead of using my car for traveling around town. Saves money and helps me work towards my other fitness goals.
-Publish 15 posts per month.
-Gain some subscribers (kinda boring just talking to myself in the beginning ya know 😉 )
-Improve the site design and add in graphics instead of just this default WordPress theme.
Well here are my goals for 2014. Did any of you make goals for the year and how are you doing on them? Leave a comment below.
To me financial independence is about being able to live my life the way I want to you without having to worry about working every day to be able to pay my living expenses. It doesn’t necessarily mean I will stop working completely though. It just means that I won’t be forced into continuing to work beyond when I want to.
For me the perfect day of financial independence would be able to wake up on my own (no more 0330 wake-ups every day!), have breakfast, and review the news and some of my favorite personal finance blogs. Then do a little investment research for my portfolios, head over to my place of business to ensure everything is running smoothly (what type of business yet, I’m not sure, it’s still a way off 😉 ), and then spend the rest of the day doing whatever I feel like. There are several hobbies that I would like to try such as photography, woodworking, and focus more on writing. I’ve always dreamt of writing my own novel and being financially independent would allow me the time necessary to actually crack down and get it done.
So here are some of my long-term goals, including F.I., those that will take several/many years to accomplish. I will be posting my short-term goals for 2014 soon.
-Become financially independent by age 40 (2032).
-Open my own small business by age 30 (2022).
-Publish a novel.
-Take a summer (maybe a whole year?) once I’m F.I. and go on a huge road trip across the U.S to visit all 50 states.
-Complete my Bachelor’s in Business Management by age 30 (2022)-currently taking 1-2 classes per semester with 3 completed.
There, I’ve put them down in writing (and sharing for the entire world to see!) to hold myself accountable. I’m going to track the progress of all of these goals here on the SFZ Blog so be sure to bookmark the site and check it out regularly. Hopefully SFZ will still be around when I’m accomplishing all of these in the future ;).
What do you think of my long-term goals? Do you share any of the same ones and what are you currently doing to accomplish them?