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Getting on the Right Track

I never get into my car without knowing where I am going. That is, I know my destination before I start driving around. Indeed, to get to my destination, I also need to know where I am starting from, and then I can get directions for getting somewhere. Your investing process is also a journey. You are now starting from a specific level of wealth and have certain investments. Where are you going? How are you going to get there?

People treat the investment process like a maze. They have only a vague notion of where they are going and frequently end up backtracking. It is quicker and more convenient to choose the path that will solve this maze. But how can you do that? As a youngster, I liked to solve mazes. One thing I learned is that it is much easier to solve a maze by starting at the end and working your way back to the beginning. I have also found that this works best for the investment process as well. So let us start at the end: retirement. Investors tend to invest according to their notion of what they need for retirement. But they really do not know what they need to amass a retirement nest egg. This chapter is all about helping you formulate specific goals and develop a roadmap for getting there. This is an important process that will help you focus on the long-term and avoid an investment blunder. Like solving a maze, we start at the end. After developing your financial goals, we will work backward to the beginning. The beginning is comprised of the investment decisions you need to make now.


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