Don't believe in myths and take control over your financial life

The Ticker

November 21, 1997|By JULIUS WESTHEIMER

"MANY FAMILIES spend more time shopping for a microwave than planning their financial futures," says Peter Lynch. Before deciding where to invest your money, you will find planning essential. Don't be misled by these myths:

Financial planning is just for rich people. That's not true. Financial planning isn't about getting wealthy. It is about people at all income levels who plan to reach their short- and long-term goals.

Anybody who wants to take control of his or her financial life must plan carefully.

Financial planning is only about investing. "While sound investing is certainly an important part of financial planning," says the Institute of Certified Financial Planners, "it is not the only part and not necessarily the main part. Financial planning concerns all financial aspects of a person's life -- taxes, insurance, retirement, budgeting and estate planning."

Financial planning is just about retirement. "You must plan for every stage of your life. Otherwise, you're just playing games with your money," says Jim Gard, in "The Small Investor."

Financial planning isn't necessary until you're older. The older you get without having done any financial planning, the fewer choices are open to you.

Example: For every 10 years you put off retirement saving, you must save three times as much every month to end with the same nest egg.

I can get along without financial planning. "That's true," says Planning Perspectives, "if you only want to 'get along' financially instead of taking charge of your money.

A recent survey that showed households with incomes under $100,000 -- the overwhelming majority of Americans -- reported saving and investing twice as much money when they had a plan than when they didn't."

WHERE TO LOOK: To find a reliable financial planner, ask friends and family whom they use -- then talk to those persons. If that fails, look in the Yellow Pages under "Financial Planning Consultants" and "Stock and Bond Brokers." Interview several candidates, then make your choice.

PLAN POINTERS: "Each person's investment policy depends on his choice of either a defensive or an aggressive role. Each person must plan ahead." ("The Intelligent Investor," by Benjamin Graham.)

"There are three kinds of investors: Those who make things happen, those who watch things happen and those who ask, 'What happened?' "("1997 Stock Trader's Almanac.")

"If you don't know who or where you are, the stock market is an expensive place to find out." (George Goodman, also known as Adam Smith.)

Pub Date: 11/21/97

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