Establishing financial goals can be daunting. Read these tips from local experts about how you might best prepare to invest in your financial future. These interviews have been edited for length and clarity.
Is there any general advice you can offer readers about how to better plan for their financial futures?
Jim Mahoney, Certified financial planner at Northampton Financial Services: “The best thing people can do today is start immediately. The sooner you start, the better. The one thing I notice is, (it seems) there’s always something more important than your financial planning … One day, they’re going to have a realization they want to retire and may not be prepared. I think the idea is to start addressing you retirement and your future earlier. Start soon. The No. 1 advice I would give people is to stop procrastinating.”
Helen Blatz, Financial/investment adviser at Edward Jones: “Be realistic. Have a handle on your spending, and get started investing early. Set realistic goals, have realistic expectations and understand your comfort level with market fluctuation. Depending on the types of investments chosen, some may have more risk than others. So you need to understand that and be comfortable with that because it’s a long-term proposition to invest. It’s not a short term goal, it’s a long-term goal.”
What are some popular misconceptions out there about personal financial planning or investing?
Blatz: “In terms of financial misconception, that it takes a large amount of money to get started. People can get started with much smaller sums. The thing is, people need to build it into their budgets, and people need to be consistent … Stick with quality, you want to identify quality investments … One of the things we do here at Edward Jones is identify quality companies we believe represent value for our clients. It’s only by thorough research you can identify some of those opportunities.”
She continued:
“In terms of individual stocks,” Blatz added, characteristics advisers tend to seek “companies that have a history of earnings and have rewarded their shareholders through dividends and have a history of increasing those dividends.”
Is there any goal that is too lofty, and if so, how might you begin that conversation with a client?
Mahoney: “That’s why it’s important you work with someone who’s objective. A lot of my job is understanding what’s realistic. Oftentimes, people have come in and just want to know if they’re in good shape … I can tell them, basically, a probability of being able to maintain this level of living expenses or standard or living through retirement … A lot of people don’t even have a budget and have to address what they spend on a monthly basis. A big part of retirement is making sure you can handle your expenses. They say it’s hard to find something if you don’t know what you’re looking for.”
When would you say is the best time for a person to begin investing?
Blatz: “Yesterday. We all have a way of learning or visualizing goals. Find what motivates you and that’ll keep you engaged … Have realistic goals. Find out what is feasible what isn’t feasible, and realize it may take some revisions.”
What is the worst kind of misstep a person can make when it comes to financial planning?
Mahoney: “I would say cashing out a 401k before retirement. I see it occasionally. People will have one job (then another), they might be in their 30s or 40s … and instead of rolling over their 401k, they’ll take it. You’re going to lose all that future compounding they would’ve realized if they left their money invested.”
How can people become more financial literate in order to better achieve their personal finance or investment goals?
Blatz: “Well, the first thing is you need to think through (is whether) you have a surplus in your budget to be able to continue to to invest. There’s long-term money, and there’s short-term money … Long-term money represents money that can be invested. From there, you would want to take full advantage of any employee-sponsored plans … And also, work with a local financial adviser to help educate you. That’s one of the things I focus on at my practice here at Edward Jones: helping your clients understand what their choices are so they can make good decisions. And also helping them to find their goals. Financial saving for retirement is always a pretty common goal, but everyone’s family is different. If they have children, they may want to save for their children’s education, they may want to plan for the unexpected. Different financial goals require different solutions.”