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Ethics in Business... A Lost Art
While watching Face the Nation one Sunday earlier this year, Bob Schiffer discussed the airline industry, his mother and ethics in business. Like Bob, I think it is a sad commentary today, that we have to police businesses. Whatever happened to...
Find a Methodology and Minimize Investment Madness
There are many reasons to be investing these days, and too much opportunity to not have your money working for you.
However, I believe the majority of people dread having to deal with investment matters, and tend to jump into purchases and...
Ground Rules for Successful Investing
Up to about 20 years ago, share investing was purely in the domain of the wealthy. For most people it was difficult to trade in overseas stock exchanges, there were no such thing as cash management trusts, installment warrants, exchange traded...
How Do You Rank in The Investing Hierarchy?
Copyright 2011 CashFlow Avenue
You probably have heard this saying before - "It is lonely at
the top." If you find yourself in this position, then you are
probably at the top of your own niche. Our society is made of
hierarchies. Most...
The Conflict of Interest Game
Disgruntled investors are going after Wall Street once again, this time accusing one of investment bank Morgan-Stanley's high-tech mutual funds of making biased stock picks.
Recent lawsuits allege the Morgan Stanley Technology fund was...
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Financial Planning and Investing
What exactly is financial planning, and why is it so important?
Financial planning is the process of determining how to manage money, investing, present and future financial goals, and the strategy that should be undertaken to obtain them.
Because our goals and desires change as we do, financial planning and investing is a task that is never finished. How we are financially able to reach these goals, and the risk we are willing to take to get there, necessarily means that any financial plan must be specifically tailored for an individual or family.
Financial planning begins by taking into account each individual's assets and liabilities at that particular point in time.
The asset category includes life insurance and monetary investments of all kinds, along with physical assets such as a home, automobiles and other items.
Liabilities may range from personal loans, credit card debt, and loans taken to obtain hard assets, such as mortgages.
Next is where sources of ongoing income and increases in hard asset wealth enter into the equation. Income most usually is earned by employment, but other sources, such as possible inheritances, must also be considered. Increases in hard asset wealth, such as rising home prices, will be affected by general economic conditions as well as owner enhancements.
From here, things get trickier, and this is where the true planning begins!
Our particular stage in life -- whether we are young, old, or somewhere in the middle -- will usually lead us to desire a particular set of goals. Financial planners often break down our life cycles into distinct phases. Which phase we are in is often determined by age but will also be dictated by how much risk we are willing to assume.
Younger people are most often
described as being in an accumulation phase. Their earnings have not yet hit their peak, but at the same time they are striving to obtain both hard and soft assets.
Examples here include saving for a new home or a child's education. Risk assumed here will be tempered by the time constraints of these goals as well as individual risk tolerance. In general, the longer the time frame, the more investments in the aggressive category may be considered.
The other phases extend to middle age and beyond to retirement. Our middle age years often find us at the peak of our earning power, with many of our former goals satisfied. This will mean greater savings are possible, and as time progresses towards retirement, our tolerance for risk will necessarily diminish.
Financial planning takes all of this into account and more. Other factors, including planning for health care and other insurance needs, preparation for emergency expenditures, tax and estate planning and the like will all be part of the strategy.
Unexpected windfalls may also enter into the picture. Saving for retirement becomes increasingly important as the time earned income will end draws nearer.
All of these variables add to the importance of financially planning across all stages of one's life. It is a concept that encompasses your total financial picture -- both in the present and for the future.
About the Author
Copyright © 2005 I.E.C. Haramis
haramis@greekshares.com
http://www.greekshares.com
Ioannis - Evangelos C. Haramis was born in Greece in 1951. Studied Business Administration, Marketing and Economics in Greece, USA and in Belgium.
He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.
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