Setting investment goals is a personal matter. But, if we set general objectives, such as “financial security” or “a comfortable retirement,” we’re going to have trouble measuring progress along the way. We may even struggle to maintain interest in the project. Vaguely defined goals can lead to half-hearted efforts to achieve them. It’s better to set goals we can grab onto; goals that excite us! Instead of “financial security,” why not $500,000 net worth by age 60? Instead of a “comfortable retirement,” why not “a portfolio that will yield $2,000 a month to supplement Social Security?” Now these are goals that we can put a price tag on as an incentive to stick to our plan. Setting investment goals is a lot like reading a map: before we can get to where we want to go, we have to figure out where we are. That’s the purpose of a personal balance sheet.
Chris Bryant is an American financial advisor.