/? 210510" Short Term And Long Term Financial Goals

Your 2010 financial goals can be as simple or as complex as you want it to be. An easy goal could be saving towards a car down payment. A more difficult goal may be saving towards early retirement.

It's important to simplify your goals as best as possible. A simple goal setting strategy is to use the acronym SMART, which stands for:

• Specific
• Measurable
• Attainable
• Relevant
• Time-Bound

The financial goal that everyone shares is saving for retirement. Unfortunately, most people don't have a specific objective in mind for this goal. There is no telling if they are ahead of behind.

Using this SMART goal setting system will easily allow you to track your financial goals. Instead of having a goal of saving for retirement, your goal will look like this: /? 210510" Short Term And Long Term Financial Goals

• Specific- Use a Roth IRA to provide an income of $5,000 a month during retirement.
• Measurable- Estimating that you can withdraw 4% of your portfolio per year, and need $60,000 per year. This goal will be attained when your Roth IRA account reaches $1,500,000(60,000/.04).
• Attainable- With an investment horizon of 40 years, you would use a Roth IRA calculator (search for Roth IRA calculator in to determine that you must save $4,100 a year, or even more specific $341.66 a month.
• Relevant-With the understanding that the S&P 500, has returned an average of 10.88% a year, and your investments will be more conservative as you get closer to your goal, an attainable rate of return would be 9%.
• Time-Bound- You will know if you have reached this goal if you have contributed $4,100 during 2010.

While retirement sounds like a complex goal, using the SMART goal system, can make it easy.Short Term And Long Term Financial Goals

When dealing with more simpler goals like saving for a down payment of a car, you can use the same process. The major difference will be in your rate of return. Instead of using 9%, you could use the interest rate on your savings account or money market fund.

Every month review your goals. You will easily know if you accomplished what you needed to last month. In the example above, if there was $341.66 deposited into a Roth IRA, then the goal was accomplished. It's as simple as that.

For long term financial goals, it's important to remain patient. Having a long term horizon means you get to ride the ups and downs of the market. There are going to be months where you look like your could reach your goal a decade sooner. However, there will be months when your goals seems long off. Have trust that the market will remain productive, and you will be rewarded. /? 210510" Short Term And Long Term Financial Goals