Three Fundamental Questions
Sometimes the answer is in the asking of the right question.
Here is our approach to answering three questions people often ask regarding their financial situation.
First, define your values, then the goals that are based on those values. Nothing matters as much as this first step. You may be the best driver in the world, driving the fastest car, but if you are driving on the wrong road, you will not be satisfied with the outcome. Similarly, all the knowledge about investments or other financial subjects are not as helpful if you have not defined your short-term, mid-term, and long-term goals that are driven by your values.
You have to be in the right frame of mind to achieve your goals. Your frame of mind plays a more critical role in reaching your goals than any specific financial information. Your values are the foundation, and your goals are the supporting columns of your future fulfilment. You would never consider removing a supporting column to make room for an extra piece of furniture in your house. Similarly, if you are genuinely committed to your goals, you would not compromise them by submitting to impulses and temptations.
The next step is financial literacy and proper guidance. These serve as your first line of defense against potential financial mishaps.
This is when a good financial advisor can play a significant role by increasing your awareness of, and your ability to address issues such as:
- Globalization, automation, and economic cycles and how they can negatively affect your long-term income potential.
- Disappearing retirement pension plans and social security benefits that are not certain.
- The rate of inflation that you are experiencing may be much higher than what the government reports.
- With the current medical advancement rate, you will likely live longer and thus require a larger retirement fund.