Three-tiered investment planning

Tina Haapala |

By Gary Silverman, CFP®

Yogi Berra once said, “If you don’t know where you are going, you might wind up someplace else.” To get to the place you want to be in your investing, this week, you have to look at your goals.

Many people invest money for reasons that have no true meaning for them. If instead you began by focusing on what matters to you in life and ensure that your priorities (goals) are consistent with those matters, then your investments will, in turn, support what is truly important to you.

Why are you investing? If you tell me, “Well, I just want more money,” I’ll ask, “What are you planning to spend that money on?” Before you begin investing you need to ask yourself why those investments matter to you. To get the answer, I suggest following a three-tiered process of planning.

There is a hierarchy in your planning. We don’t begin by planning investments. Your investment goal isn’t there for its own sake. Rather, it supports one or more of your financial goals. Likewise, financial goals aren’t there for themselves. Instead, they support your life goals. Each must be based on the planning before it.

Life Planning: What are you trying to do in life?

Financial Planning: What are the financial needs of your life goals?

Investment Planning: What are the investment needs of your financial goals?

Not all life goals need financial goals to support them, just as not all financial goals require investing. But every investment goal has an associated financial goal and every financial goal has an associated life goal. At least they should.

When you are done with your goals, you should know...

Why you are investing your money.

When you will first need the money.

When you no longer need the money.

If you have any “slop” in your goal.

Some of your “whys” will be dreams, some will be wants, and some will be needs. But they all will be important to you.

When you set financial goals, keep three things in mind:

Be realistic: Set goals that make sense and are possible for you to achieve.  Sometimes you will have to accomplish short term goals before you can make long term plans.

Be specific: Set target dates for reaching your goals.  Attach dollar amounts to you goals. This will help you monitor your progress.

Visualize your goals: Think about your goals often.  Imagine yourself achieving your goals.  This will increase your desire to succeed.

Investing is not about maximum returns, it’s about matching your returns (and the risks associated with them) to your goals. 


This article was published in the Wichita Falls Times Record  News on January 22, 2017.

Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing.