• About us
    • Who we are
    • Mission
  • Contacts
  • English
    • Português (Portuguese (Portugal))
    • Español (Spanish)
    • Français (French)
  • Login
  • Register
Investorpolis
Advertisement
  • Home
  • Investing Series Guide
    • All
    • I. Goal Based Investing
    • II. Compounding & Inflation
    • III. Assets Risks & Returns
    • IV. Efficient Diversification
    • IX. Sustainable Investing and ESG
    • V. The Investor
    • VI. Assets and Investments
    • VII. Index Funds
    • VIII. Successful Investing
    • XI. Other Topics
    Simple Portfolio Series (DIY) Part 2: The Traditional Portfolio 60/40, what it is, for whom, and its performance

    Simple Portfolio Series (DIY) Part 2: The Traditional Portfolio 60/40, what it is, for whom, and its performance

    Simple or Lazy Portfolio Series (DIY): Part 1 – Overview

    Simple or Lazy Portfolio Series (DIY): Part 1 – Overview

    Choosing Mutual Funds Series: Part 5 – Funds availability and currency of investment

    Choosing Mutual Funds Series: Part 5 – Funds availability and currency of investment

    Maximize time invested in the stock market instead of market timing: Part 2. Impossibilities and losses (cont.)

    Maximize time invested in the stock market instead of market timing: Part 2. Impossibilities and losses (cont.)

    Maximizing time invested in the stock market instead of market timing: Part 1 – Biases and losses

    Maximizing time invested in the stock market instead of market timing: Part 1 – Biases and losses

    ESG Investing Series: Part 9 – Developments and models of corporate governance regulation in the world

    ESG Investing Series: Part 9 – Developments and models of corporate governance regulation in the world

    Trending Tags

      • I. Goal Based Investing
      • II. Compounding & Inflation
      • III. Assets Risks & Returns
      • IV. Efficient Diversification
      • V. The Investor
      • VI. Assets and Investments
      • VIII. Successful Investing
      • IX. Sustainable Investing and ESG
      • X. Kits and Tips
      • XI. Other Topics
    • Wealth and Investing
      • All
      • Investing
      • Wealth
      How Women invest: Part 2 – The results are equivalent to those of men, but with significant differences in investment management

      How Women invest: Part 2 – The results are equivalent to those of men, but with significant differences in investment management

      Outlook 2023: Part 5 – 2023 will be a transitional year with two halves

      Outlook 2023: Part 5 – 2023 will be a transitional year with two halves

      Outlook 2023: Part 4 – In changing economic cycle, policies, and market sentiment, valuation matters become more than ever

      Outlook 2023: Part 4 – In changing economic cycle, policies, and market sentiment, valuation matters become more than ever

      Outlook 2023: Part 3 – 2022 was bad for investments, but was not the same for everything

      Outlook 2023: Part 3 – 2022 was bad for investments, but was not the same for everything

      Outlook 2023: Part 2 – Investment losses in 2022 cost so much that sometimes we forget about previous gains

      Outlook 2023: Part 2 – Investment losses in 2022 cost so much that sometimes we forget about previous gains

      Outlook 2023: Part 1 – 2022 was a bad year for investments, but we can’t lose the medium and long-term perspective

      Outlook 2023: Part 1 – 2022 was a bad year for investments, but we can’t lose the medium and long-term perspective

      Trending Tags

        • Investing
        • Wealth
      • Retirement & Savings
        • All
        • Retirement
        • Savings
        Retirement Series: How much money do we need to live through retirement?

        Retirement Series: How much money do we need to live through retirement?

        Retirement Series: Part 1 – Overview – A backwards view

        Retirement Series: Part 1 – Overview – A backwards view

        How many years do our public or social pensions last?

        What is the replacement rate of retirement pensions?

        How many years will we live in retirement?

        Planning for a good financial life in retirement

        Trending Tags

          • Retirement
          • Savings
        • Tools
          • All
          • Calculators
          • Publications
          • Sites and apps
          Morningstar Rating for Funds

          Morningstar Rating for Funds

          Morningstar’s European Active/Passive Barometer

          Morningstar’s European Active/Passive Barometer

          Morningstar’s U.S. Active vs. Passive Barometer

          Morningstar’s U.S. Active vs. Passive Barometer

          The Power of Dividends: Past, Present, and Future, Hartford Funds, 2021

          The Power of Dividends: Past, Present, and Future, Hartford Funds, 2021

          OECD Corporate Governance Factbook 2021

          OECD Corporate Governance Factbook 2021

          G20/OECD Principles of Corporate Governance, 2015

          G20/OECD Principles of Corporate Governance, 2015

          Trending Tags

          • calculators
          • Calculators
          • Publications
          • Sites and apps
        • More
          • All
          • Best of
          Best Of Mutual Funds Series: Dividend Stocks for Investors Outside the U.S.

          Best Of Mutual Funds Series: Dividend Stocks for Investors Outside the U.S.

          Best Of Mutual Funds Series: Dividend Stocks for U.S. Investors

          Best Of Mutual Funds Series: Dividend Stocks for U.S. Investors

          Best Of Mutual Funds Series: Investment Grade Bonds, Indexed, for Eurozone Investors

          Best Of Mutual Funds Series: Investment Grade Bonds, Indexed, for Eurozone Investors

          Best Of Mutual Funds Series: US Bonds, Indexed, for US Investors

          Best Of Mutual Funds Series: US Bonds, Indexed, for US Investors

          Best Of Mutual Funds Series: Passive, US Large Stocks, for Non-US Investors

          Best Of Mutual Funds Series: Passive, US Large Stocks, for Non-US Investors

          Best Of Mutual Funds Series: Passive Large US Stocks for US Investors

          Best Of Mutual Funds Series: Passive Large US Stocks for US Investors

          Trending Tags

            • Best of
            • Reviews
            • Snapshots
            • Others
          No Result
          View All Result
          • Home
          • Investing Series Guide
            • All
            • I. Goal Based Investing
            • II. Compounding & Inflation
            • III. Assets Risks & Returns
            • IV. Efficient Diversification
            • IX. Sustainable Investing and ESG
            • V. The Investor
            • VI. Assets and Investments
            • VII. Index Funds
            • VIII. Successful Investing
            • XI. Other Topics
            Simple Portfolio Series (DIY) Part 2: The Traditional Portfolio 60/40, what it is, for whom, and its performance

            Simple Portfolio Series (DIY) Part 2: The Traditional Portfolio 60/40, what it is, for whom, and its performance

            Simple or Lazy Portfolio Series (DIY): Part 1 – Overview

            Simple or Lazy Portfolio Series (DIY): Part 1 – Overview

            Choosing Mutual Funds Series: Part 5 – Funds availability and currency of investment

            Choosing Mutual Funds Series: Part 5 – Funds availability and currency of investment

            Maximize time invested in the stock market instead of market timing: Part 2. Impossibilities and losses (cont.)

            Maximize time invested in the stock market instead of market timing: Part 2. Impossibilities and losses (cont.)

            Maximizing time invested in the stock market instead of market timing: Part 1 – Biases and losses

            Maximizing time invested in the stock market instead of market timing: Part 1 – Biases and losses

            ESG Investing Series: Part 9 – Developments and models of corporate governance regulation in the world

            ESG Investing Series: Part 9 – Developments and models of corporate governance regulation in the world

            Trending Tags

              • I. Goal Based Investing
              • II. Compounding & Inflation
              • III. Assets Risks & Returns
              • IV. Efficient Diversification
              • V. The Investor
              • VI. Assets and Investments
              • VIII. Successful Investing
              • IX. Sustainable Investing and ESG
              • X. Kits and Tips
              • XI. Other Topics
            • Wealth and Investing
              • All
              • Investing
              • Wealth
              How Women invest: Part 2 – The results are equivalent to those of men, but with significant differences in investment management

              How Women invest: Part 2 – The results are equivalent to those of men, but with significant differences in investment management

              Outlook 2023: Part 5 – 2023 will be a transitional year with two halves

              Outlook 2023: Part 5 – 2023 will be a transitional year with two halves

              Outlook 2023: Part 4 – In changing economic cycle, policies, and market sentiment, valuation matters become more than ever

              Outlook 2023: Part 4 – In changing economic cycle, policies, and market sentiment, valuation matters become more than ever

              Outlook 2023: Part 3 – 2022 was bad for investments, but was not the same for everything

              Outlook 2023: Part 3 – 2022 was bad for investments, but was not the same for everything

              Outlook 2023: Part 2 – Investment losses in 2022 cost so much that sometimes we forget about previous gains

              Outlook 2023: Part 2 – Investment losses in 2022 cost so much that sometimes we forget about previous gains

              Outlook 2023: Part 1 – 2022 was a bad year for investments, but we can’t lose the medium and long-term perspective

              Outlook 2023: Part 1 – 2022 was a bad year for investments, but we can’t lose the medium and long-term perspective

              Trending Tags

                • Investing
                • Wealth
              • Retirement & Savings
                • All
                • Retirement
                • Savings
                Retirement Series: How much money do we need to live through retirement?

                Retirement Series: How much money do we need to live through retirement?

                Retirement Series: Part 1 – Overview – A backwards view

                Retirement Series: Part 1 – Overview – A backwards view

                How many years do our public or social pensions last?

                What is the replacement rate of retirement pensions?

                How many years will we live in retirement?

                Planning for a good financial life in retirement

                Trending Tags

                  • Retirement
                  • Savings
                • Tools
                  • All
                  • Calculators
                  • Publications
                  • Sites and apps
                  Morningstar Rating for Funds

                  Morningstar Rating for Funds

                  Morningstar’s European Active/Passive Barometer

                  Morningstar’s European Active/Passive Barometer

                  Morningstar’s U.S. Active vs. Passive Barometer

                  Morningstar’s U.S. Active vs. Passive Barometer

                  The Power of Dividends: Past, Present, and Future, Hartford Funds, 2021

                  The Power of Dividends: Past, Present, and Future, Hartford Funds, 2021

                  OECD Corporate Governance Factbook 2021

                  OECD Corporate Governance Factbook 2021

                  G20/OECD Principles of Corporate Governance, 2015

                  G20/OECD Principles of Corporate Governance, 2015

                  Trending Tags

                  • calculators
                  • Calculators
                  • Publications
                  • Sites and apps
                • More
                  • All
                  • Best of
                  Best Of Mutual Funds Series: Dividend Stocks for Investors Outside the U.S.

                  Best Of Mutual Funds Series: Dividend Stocks for Investors Outside the U.S.

                  Best Of Mutual Funds Series: Dividend Stocks for U.S. Investors

                  Best Of Mutual Funds Series: Dividend Stocks for U.S. Investors

                  Best Of Mutual Funds Series: Investment Grade Bonds, Indexed, for Eurozone Investors

                  Best Of Mutual Funds Series: Investment Grade Bonds, Indexed, for Eurozone Investors

                  Best Of Mutual Funds Series: US Bonds, Indexed, for US Investors

                  Best Of Mutual Funds Series: US Bonds, Indexed, for US Investors

                  Best Of Mutual Funds Series: Passive, US Large Stocks, for Non-US Investors

                  Best Of Mutual Funds Series: Passive, US Large Stocks, for Non-US Investors

                  Best Of Mutual Funds Series: Passive Large US Stocks for US Investors

                  Best Of Mutual Funds Series: Passive Large US Stocks for US Investors

                  Trending Tags

                    • Best of
                    • Reviews
                    • Snapshots
                    • Others
                  No Result
                  View All Result
                  Investorpolis
                  No Result
                  View All Result
                  Home Investing Series Guide I. Goal Based Investing

                  The goal-based planning and investing process in practice

                  5 de January, 2020
                  in I. Goal Based Investing, Investing Series Guide
                  Reading Time: 6 mins read
                  0 0
                  0
                  Share on FacebookShare on Twitter

                  The goal-based investing planning process comprises 5 phases:

                  #1 Define possible financial objectives

                  #2 Identify current and future available resources

                  #3 Determine the appropriate strategy for the distribution of capital between savings and investments, in accordance with their characteristics and personal conditions, and aimed at achieving objectives

                  #4 Implement the plan now, don’t leave it for tomorrow

                  #5 Reassess progress every six months, or at least annually, aligning it with personal circumstances

                  In another post we explained the rationale and benefits of making wealth and investments management guided by financial objectives. In this post we will see how this is done in practice. 

                  The goal-based investing planning process comprises 5 phases

                  The personal financial plan should be an interactive exercise of adjustment between what we want and what we can achieve, and should comprise 5 phases:

                  1. Define the financial objectives;
                  2. Identify the available financial resources, i.e. assess the current financial situation and project predictable financial capacity;
                  3. Determine the strategy by choosing the allocation of assets that will guide the selection of investments;
                  4. Implement the plan by selecting and making concrete investments;
                  5. Assess progress, or monitor evolution, and review the exercise.

                  Source: CFA Institute

                  As we know, the capital we have throughout our lives – accumulated savings and future income – is scarce, and personal objectives are multiple and compete with each other.

                  Therefore, for the individual financial plan to be realistic, we must start by defining each of the objectives, considering the present and future financial capacity, the so-called resources available. It is based on reconciling objectives and resources that we can determine investment strategies.

                  #1 Define possible financial objectives

                  Financial objectives should be realistic, prioritized and scheduled in target dated goals.

                  In terms of priorities, in all objectives we have needs, interests and aspirations according to their level of criticism.

                  In terms of the time horizon, we have short-term (up to 2 years), medium-term (2 to 10 years) and long-term (more than 10 years) objectives. For example, in short-term objectives, we have high-cost debts or unforeseen expenses such as medical, home repair or car expenses. In the medium-term objectives we find, for example, the establishment of a reserve or emergencies fund to deal with unexpected and unforeseen expenses and situations or to give the upfront amount for purchase of a house. In the long-term objectives we have, among others, the retirement and the children tuition fees.

                  Source:FINRA – Financial Industry Regulatory Autority

                  #2 Identify current and future available resources

                  In order to assess the available resources, we need to build on our situation and financial capacity, including:

                  1. Current net financial assets (balance between financial assets and liabilities);
                  2. Future contributions foreseeable. They depend on expected income and expenditure, and the capacity for savings, and a financial budget is therefore needed.

                  The diagram of personal wealth flows, which contains the sources and uses of incomes, applies to all of us. We have the sources of wealth or wealth generation, which comprise the income obtained, social and private pensions and the inheritances received. And we also have the uses or expenses of wealth, which include expenses, insurance, taxes and inheritances given.

                  The difference between income stemming from and the expenses made are savings, which can be placed in deposits or savings accounts, or invested in financial assets. There is also negative savings, which are all our debts.  

                  Source: hoganfinancial.com

                  We must collect, analyse and evaluate the information of our situation, condition and overall financial capacity, present and future.

                  There are a set of simulators available on the internet as well as apps for money management smartphones, which allow us to balance or budget our finances, as well as evaluate and control our financial budget, even allowing us to see where we can save more.

                  #3 Determine the appropriate strategy for the distribution of capital between savings and investments, in accordance with their characteristics and personal conditions, and aimed at achieving objectives

                  Determining the strategy includes the following steps:

                  1. Distribute resources by objectives;
                  2. Distribute money or capital between savings (deposits and savings accounts) and investments;
                  3. Make the distribution of investments by asset and financial classes and subclasses.

                  The allocation of resources to the objectives is to distribute scarce capital by multiple objectives, thus focusing on priorities.

                  https://static.fmgsuite.com/media/images/64a82102-af3a-4cd7-b437-f60088bc1469.jpg

                  The distribution of resources between savings and investments is determined by the investment period because, as we have seen earlier, for the short term (term less than 2 years), the most appropriate option are savings, while for the medium and long term, the correct choice are investments.

                  The allocation of investments by asset classes and subclasses, including between stocks and bonds, and their segments, stems from their expected profitability and risk, the time limit for meeting the objectives, and our risk profile in terms of preservation or appreciation of capital (which comprises both the ability to take risk and our risk tolerance).

                  This work allows to project the expected rates of return for the investment portfolios of each objective, and by this way, to determine the ability to achieve the accumulated capital objective within the defined period and which capital we should carry out in every moment of time.

                  #4 Implement the plan now, don’t leave it for tomorrow

                  Having decided to distribute the capital available between savings and investments, and in these by subclasses of assets, the next step is to realise investments.

                  When? Right away because there are no better moments.

                  How? In savings is making placements where we feel safer. As for investments, their selection involves efficient diversification between asset subclasses and the choice of the most representative products of this class and lower cost.  

                  If we do all these steps well, the conditions for successful investments are met.

                  #5 Reassess progress every six months, or at least annually, aligning it with personal circumstances

                  When? Ideally, every six months or at least annually.

                  How? The main idea is to stay on course and avoid acting depending on the market noise. The exception is if there is a change in personal circumstances justifying or even requiring the review and reformulation of some of the objectives. 

                  These 5 themes will be developed in articles to be published below.

                  Previous Post

                  How do retired people live?

                  Next Post

                  Who are we as investors? What is our investor profile?

                  Investadmin

                  Investadmin

                  Related Posts

                  Simple Portfolio Series (DIY) Part 2: The Traditional Portfolio 60/40, what it is, for whom, and its performance
                  Investing Series Guide

                  Simple Portfolio Series (DIY) Part 2: The Traditional Portfolio 60/40, what it is, for whom, and its performance

                  28 de January, 2023
                  Simple or Lazy Portfolio Series (DIY): Part 1 – Overview
                  Investing Series Guide

                  Simple or Lazy Portfolio Series (DIY): Part 1 – Overview

                  28 de January, 2023
                  Choosing Mutual Funds Series: Part 5 – Funds availability and currency of investment
                  Investing Series Guide

                  Choosing Mutual Funds Series: Part 5 – Funds availability and currency of investment

                  24 de January, 2023
                  Maximize time invested in the stock market instead of market timing: Part 2. Impossibilities and losses (cont.)
                  Investing Series Guide

                  Maximize time invested in the stock market instead of market timing: Part 2. Impossibilities and losses (cont.)

                  21 de November, 2022
                  Maximizing time invested in the stock market instead of market timing: Part 1 – Biases and losses
                  Investing Series Guide

                  Maximizing time invested in the stock market instead of market timing: Part 1 – Biases and losses

                  21 de November, 2022
                  ESG Investing Series: Part 9 – Developments and models of corporate governance regulation in the world
                  Investing Series Guide

                  ESG Investing Series: Part 9 – Developments and models of corporate governance regulation in the world

                  15 de August, 2022
                  Next Post

                  Who are we as investors? What is our investor profile?

                  Leave a Reply

                  Your email address will not be published. Required fields are marked *

                  Trending

                  How Women invest: Part 2 – The results are equivalent to those of men, but with significant differences in investment management

                  How Women invest: Part 2 – The results are equivalent to those of men, but with significant differences in investment management

                  2 de March, 2023
                  Outlook 2023: Part 5 – 2023 will be a transitional year with two halves

                  Outlook 2023: Part 5 – 2023 will be a transitional year with two halves

                  17 de February, 2023
                  Outlook 2023: Part 4 – In changing economic cycle, policies, and market sentiment, valuation matters become more than ever

                  Outlook 2023: Part 4 – In changing economic cycle, policies, and market sentiment, valuation matters become more than ever

                  17 de February, 2023
                  Outlook 2023: Part 3 – 2022 was bad for investments, but was not the same for everything

                  Outlook 2023: Part 3 – 2022 was bad for investments, but was not the same for everything

                  16 de February, 2023
                  Investorpolis

                  We developed this blog because we believe that only a small learning effort is needed to make a big change in the decisions and results of our investments and financial assets.

                  Main categories

                  • Investing Series Guide
                  • Wealth and Investing
                  • Retirement & Savings
                  • Tools
                  • More

                  Newsletter

                  Sign to our mailing list to receive updates direct to your inbox!

                  *We don’t spam

                  • Privacy Policy
                  • Cookie Policy
                  • Contacts

                  © 2021 - Investorpolis / Powered by Delta Soluções

                  • pt-pt Português
                  • fr Français
                  • es Español
                  • en English
                  • Home
                  • Investing Series Guide
                    • I. Goal Based Investing
                    • II. Compounding & Inflation
                    • III. Assets Risks & Returns
                    • IV. Efficient Diversification
                    • IX. Sustainable Investing and ESG
                    • V. The Investor
                    • VI. Assets and Investments
                    • VII. Index Funds
                    • VIII. Successful Investing
                    • X. Kits and Tips
                    • XI. Other Topics
                  • Retirement & Savings
                    • Retirement
                    • Savings
                  • Wealth and Investing
                    • Investing
                    • Wealth
                  • Tools
                    • Calculators
                    • Publications
                    • Sites and apps
                  • More
                    • Best of
                    • Reviews
                    • Snapshots
                    • Others
                  • About us
                    • Who we are
                    • Mission
                  • Login
                  • Sign Up
                  • Cart

                  © 2021 - Investorpolis / Powered by Delta Soluções

                  Welcome Back!

                  Login to your account below

                  Forgotten Password? Sign Up

                  Create New Account!

                  Fill the forms bellow to register

                  All fields are required. Log In

                  Retrieve your password

                  Please enter your username or email address to reset your password.

                  Log In
                  We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
                  Cookie configurationCookie PolicyAcceptReject
                  Manage consent

                  Privacy Overview

                  This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
                  Advertisement
                  Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
                  Analytics
                  Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
                  Functional
                  Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
                  Necessary
                  Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
                  Others
                  Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
                  Performance
                  Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
                  SAVE & ACCEPT

                  Add New Playlist

                  Are you sure want to unlock this post?
                  Unlock left : 0
                  Are you sure want to cancel subscription?