Making Investments in Your Future: How to Set and Achieve Financial Goals

The beginning of the new year traditionally is the time to make resolutions, but when it comes to your finances, anytime can be a good time to take stock and set goals.

According to a Fidelity Investments survey, 43 percent of American adults resolve to improve their finances in 2010, up from 35 percent last year. Yet most people fail to keep their resolutions, and as many as a third lose their resolve within a month, says a FranklinCovey survey.

Don't let your resolve slip away in the next year. Here are 10 tips for setting and achieving your financial goals.

Investments Should Reflect Values

1. Create goals that reflect your values. Think about what's important to you. What do you want out of life long-term and in the next year? There's no use in setting goals that don't dovetail with your values.

2. Make sure your goals are achievable. It's good to stretch for new achievements, but you're likely to give up if the goals aren't reachable. Review your financial life and set goals that you know you can achieve if you work hard.

3. Be specific. Make your goals measurable. Instead of "save more money," set a specific dollar figure or percentage per week or month to save. Instead of "learn more about investing," set a goal for taking a personal finance course or reading one finance-related article per week.

4. Set short-term, medium-term, and long-term goals. Short-term goals might include saving for a summer vacation or paying down a high-interest credit card. A medium-term goal might be purchasing a car, and a long-term goal might be saving for a down payment on a house or saving toward a comfortable retirement.

When Will You Purchase a Certificate of Deposit?

5. Set time limits. If one of your goals is to pay down a credit card, by when do you want to have the credit card paid off? If you plan to save $1,000 for a certificate of deposit, when do you want to buy the CD?

6. Prioritize. Choose a few goals to focus on and make sure your short-term goals build toward your long-term goals.

7. Write down your goals. You're less likely to forget your goals if you write them down. Post them in a spot that you see frequently to reminder yourself of the direction you've set.

8. Plan how to reach your goals. Say you decide to save for a down payment on a new car. How will you do it? How much will you need to set aside, where will that money come from, and where will you deposit the money? In that case, you may want to open a separate savings account or money market account.

Boost Savings Rates: Make It Automatic

9. Make achievement automatic. The best way to achieve savings goals is to make savings automatic. Increase the percentage deducted from your paycheck into an employer-sponsored retirement plan to boost retirement savings. Ask your bank to automatically deduct money from your checking account to a savings or money market account each month. You won't miss the money as much if it's deducted before you have a chance to spend it.

10. Follow up. Schedule times to check your progress and adjust your goals. Many fail to reach their goals because of inflexibility or a lack of follow-through. Avoid all-or-nothing thinking. If it turns out after three months you can't afford to save 10 percent of every paycheck, then adjust the goal to, say, 5 percent.


National Endowment for Financial Education • Be Smart About Your Goals • http://www.smartaboutmoney.orghttp://www.smartaboutmoney.org/Home/TaketheFirstStep/SetFinancialGoals/tabid/404/Default.aspx
Etta Mae Westbrook • Setting and Achieving Financial Goals •  http://www.utextension.utk.edu/publications/pbfiles/pb1454.pdf
Vanguard Retirement Plans • How to Keep New Year's Resolutions • https://retirementplans.vanguard.com/VGApp/pe/pubnews/NewYearResolutions.jsf?SYND=RSS&Channel=yourmoney
National Foundation for Credit Counseling • CREDIT COUNSELING CEOs LIST TOP TEN NEW YEAR'S FINANCIAL RESOLUTIONS • http://www.nfcc.org/FinancialEducation/consumertips/FinancialResolutions.cfm
Selena Maranjian • How to Keep Your Resolve (and Get Richer) • http://www.fool.com/retirement/general/2009/12/28/how-to-keep-your-resolve-and-get-richer.aspx

Protecting Your Investments: Five Ways to Avoid Fraud

Too many lives have been shattered from investment scams in the last year--from Bernie Madoff's $65 billion Ponzi scheme to the alleged sale of phony CDs by Texas financier R. Allen Stanford, accused of swindling more than $7 billion from investors.

Shady financial deals victimize people of all types--from wealthy, sophisticated investors to earnest folks of modest means. Don't let this happen to you. Follow these seven tips to avoid investment fraud:

1. Beware of "Sure Things" with Big Returns

If an investment sounds too good to be true..... A high return means high risk. The safest investments, such as money market accounts and certificates of deposit, pay low returns, but your money is guaranteed even if the bank fails, as long as your deposits at that financial institution are within the $250,000 FDIC insurance limit. Stock market investments can pay higher returns, but they also carry the risk of heavy losses.

2. Understand and Monitor Investments

The investment strategy should make sense. You should understand how the investment works and exactly how you can exit. Learn what regulatory body oversees the investment and what the regulatory protections are. Some investments are more heavily regulated than others. Ask for explanations if a financial advisor uses terms you don't understand. (con artists are good at using jargon to cover up inconsistencies). And don't ever let other people make financial decisions for you. Once you decide to invest, monitor the investment, and insist on getting regular written reports. Beware of red flags, such as an advisor stalling you when you try to get your money out.

3. Get a Reality Check

Check out the investment performance claims of the advisor against a reported benchmark to see if the claims are believable, suggests the CFA Institute, a global association of investment professionals. Madoff, for instance, reported unrealistically consistent performance to his investors, which should have been a tipoff that something was awry. The CFA Institute says to find out if a firm has its performance figures independently audited, who audits them, and whether the firm complies with the Global Investment Performance Standards, a set of standards for calculating and reporting investment results.

4. Know Who You're Dealing With

The old saying "Don't judge a book by its cover" applies to investment professionals. Con artists are practiced performers. They can sound professional and be remarkably charming to win your trust. Check into investment advisors' backgrounds and registration. How much experience do they have? Are they targets of any censures, pending investigations, or lawsuits? Check the Financial Industry Regulatory Authority and the Securities and Exchange Commission for information about firms and advisers, the CFA Institute suggests.

5. Beware of "Reload" Scams

Here's how it works: A con artist gets you to invest in a scam, and you lose a ton of money. Then, while you're in panic about your loss, the scammer preys on your fears and persuades you to invest again to recoup your money and perhaps earn even higher returns than were expected the first time around. Don't fall for a lousy deal twice. If you think you might have been a victim of fraud, talk to your state's financial regulators.

Investment fraud is tragic. Too often people who have been conned feel embarrassed to come forward, but the sooner you report fraud, the better your chances are of getting back some of your money. You'll also save others from becoming victims, too.


JULIE CRESWELL and LANDON THOMAS Jr. • The Talented Mr. Madoff • nytimes.comhttp://www.nytimes.com/2009/01/25/business/25bernie.html
Laurel Brubaker Calkins and Karen Gullo • Stanford Fails to Win Bail on Verge of ?Breakdown? • Business Week • /news/2009-12-23/stanford-fails-to-win-bail-on-verge-of-breakdown-update1-.html
Securities and Exchange Commission • SEC Charges R. Allen Stanford, Stanford International Bank for Multi-Billion Dollar Investment Schem • http://www.sec.gov/news/press/2009/2009-26.htm
CFA Institute • Ten Ways To Avoid Investment Fraud • http://www.cfainstitute.org/aboutus/investors/pdf/avoid_investment_fraud.pdf
Washington State Department of Financial Institutions • How to Avoid Scams & Fraud • http://www.dfi.wa.gov/consumers/invest_scam_avoid.htm

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Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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