While it’s critical to build upon our foundational knowledge of money, the basics of financial planning and investments never goes away.
The Basics
It can be tempting to bypass the basics of financial planning. The financial planning process can, to some, seem like an unnecessary step. For some, it can be tempting to purchase an investment that sounds interesting before understanding how it fits into their portfolio.
It’s tempting to focus on investment opportunities before financial planning.
But, to purchase an investment without knowing your financial goals, loss threshold (risk tolerance), investment resources, and a foundational knowledge of investments is a risky move.
Leapfrogging ahead of the financial planning basics and going straight to purchasing investments overlooks a very key and crucial step.
Financial Planning
Investments aren’t speculative on their own. They are speculative when they aren’t being considered in the context of a financial plan.
The financial planning process provides several things. Key are that it creates a roadmap that informs which investments are suitable.
It also maps what a client is hoping to accomplish: their financial goals.
It also includes making sure the client understands investments and their role in reaching financial goals.
Which isn’t to say any investment is a bad choice.
But, they are shots in the dark if they don’t have a role to play towards our financial goals.
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.