Chart your future

Saving for college? Buying a home? Planning for retirement? Whatever your goals, it helps to chart a path to get there.



Chart your future


Saving for college? Buying a home? Planning for retirement? Whatever your goals, it helps to chart a path to get there.



Chart your future


Saving for college? Buying a home? Planning for retirement? Whatever your goals, it helps to chart a path to get there.

What do you want out of life?

See how one family managed caring for their aging parents and their own children.

We all have goals. In fact, many of us have quite a few of them.

Juggling multiple goals in a world of finite time and money can be tough. But the secret to reaching goals isn’t much of a secret at all: it’s a lot easier to get where you want to go when you draw up a plan. 

What does it mean to plan? Broadly speaking, it’s a matter of deciding on goals, setting priorities and laying out concrete steps to get there.

It may sound simple, but here’s the thing: Planning works. Research has shown that people who create a financial plan and stick to it end up with significantly more wealth than people who do little or no planning.

See how one family managed caring for their aging parents and their own children.

Planning Chart

 

 

 

 

 

 


So what’s on your list?

  • Needs

    • You have a long commute to work and need a reliable vehicle.
  • Wants

    • Your current car is fine, but you wouldn’t mind an upgrade.
  • Wishes

    • You could see yourself doing the shopping in an all-electric luxury car. 
  • Needs

    • You have a baby on the way and need to find a house for your growing family.
  • Wants

    • You want to buy a cottage to generate rental income.
  • Wishes

    • You wish to own a house in wine country someday.
  • Needs

    • You need to save because you don’t have a pension. Social Security may not cover all your expenses.
  • Wants

    • You want a comfortable lifestyle in retirement that gives you the freedom to visit family in other states.
  • Wishes

    • You can see yourself enjoying a lot of sunsets in Tuscany.
  • Needs

    • You need to save for your child’s college tuition.
  • Wants

    • You’d like to get a master’s degree to support a mid-career job change.
  • Wishes

    • You’ve always been interested in history and wouldn’t mind taking some classes just for fun.
  • Needs

    • You’re in poor health and know your medical bills will be large in the years ahead.
  • Wants

    • Your insurance doesn’t cover a trip to the chiropractor’s office, but you’d like to go.
  • Wishes

    • You’d love to get braces and have a Hollywood smile.
  • Needs

    • You run your own design company and need to upgrade your computer equipment.
  • Wants

    • You want to take your family on a trip to Europe.
  • Wishes

    • You’ve had your eye on some sports memorabilia that would bring your man cave to life.

 

Once you’ve laid out your goals, it’s time to map your path to reaching them.

But before we dig into the details, it’s worth remembering that this isn’t a rigid, “one and-done” process.

Your plan is a living thing that grows and changes with you.

 

 

 



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1. Organize your information

A key part of financial planning is collecting and organizing your personal information and your goals.
Questions to consider:
Are you married?
Do you have beneficiaries?
At what age do you plan to retire?

2. Prioritize Your Goals

Identifying and prioritizing your goals helps you understand the best ways to save and invest.
Questions to consider:
Are you currently saving for retirement?
Do you have an emergency fund?

3. Take stock of where your are

Any serious examination of your finances should look at both sides of the balance sheet: assets and liabilities.
Questions to consider:
In the past, how have you prioritized paying debt?
Do you plan on buying a home or a car in the near future?

4. Talk About Risk

Investments have varying levels of risk. How comfortable are you with the potential of losing money? Your age is often a big factor in how comfortable you are with risk, as well as your actual capacity to withstand a financial shock.
Questions to consider:
How much risk can you afford?
Is it OK if you lose money in the short term, but make it up over time?

5. Put Your Plan Into Motion

Once you have determined your goals and your risk, you will receive some concrete recommendations about how to invest your money. Then, it’s time to put your plan into practice.
Questions to consider:
How comfortable are you increasing monthly savings to fund each goal?
How important is your retirement date?

6. Monitor Your Progress

After you are investing and contributing regularly toward your goals, you still need to check in and make sure your plan meets your needs.
Questions to consider:
How are your investments performing over time?
Have you experienced any changes in your spending or saving habits?

Schwab can help you create a financial plan

Learn more >>

What's the best way to invest?

Like many couples on their second marriages, Ruth and Phil were wary of combining their finances. Watch their story.

You don't want all your eggs in one basket.

Once you've identified your goals, it's time to work out an appropriate savings and investment plan. In practical terms, that means drawing up a budget and putting your savings to work by investing. Now, this doesn’t mean picking a few stocks and hoping for the best. The trick is to find a diverse mix of investments that can deliver an appropriate level of return—without exposing you to more risk than you can handle.

Most of us are familiar with the broad categories when it comes to investing: stocks, bonds, cash and commodities. But you can actually slice and dice these categories into distinct subcategories.

For example, within the world of stocks, you can invest in both domestic and international stocks, and then get even more precise by choosing between small and large company stocks, developed- and emerging-market stocks, dividend-paying stocks, real estate investment trusts and master limited partnerships.

 

Like many couples on their second marriages, Ruth and Phil were wary of combining their finances. Watch their story.


What makes a portfolio diversified?

Stocks
Historically, stocks have delivered higher average returns but come with higher risk. Other investments in the broad category of "stocks" include master limited partnerships (MLPs) and real estate investment trusts (REITs), which may also offer long-term inflation protection.
Cash
An FDIC-insured cash component can provide stability and liquidity to your overall portfolio.
Commodities
Commodities like gold and other precious metals can play an important role in a diverse portfolio.While commodities can be volatile, they add diversity because they tend to perform differently than stocks and bonds.They can also provide a measure of inflation protection, because commodities rise in tandem with the price of underlying goods.
Fixed Income
Government bonds, corporate bonds, bank loans and other fixed income investments provide diversification and generate income in your portfolio. While fixed income investments carry varying degrees of risk, they may serve as a buffer against historically riskier holdings such as stocks.

What makes a portfolio diversified?

Each kind of investment has different characteristics in terms of risks and returns. In general, there's a trade off between risk and return. Investments with high rewards, like stocks, generally have high risks. Whereas investments with lower risks, like bonds, tend to have lower rewards.

The most effective portfolios are finely wrought machines. They take your goals, your timeframe and your tolerance toward risk and translate them into a diverse selection of investments drawn from the universe shown in the chart above.

 

 

 

Every investor is different, so a one-size-fits-all approach to planning doesn't make sense

 
How automated investment services work

At Schwab, you and your planner can also use the latest technology to help build and manage your portfolio.

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How automated investment services work

At Schwab, you and your planner can also use the latest technology to help build and manage your portfolio.

It's kind of the best of both worlds: Automated investment advisory services can do much of the heavy lifting of assembling and rebalancing.

Once you give such a service some information about your goals, timeframe, and risk tolerance, it will recommend a portfolio of exchange-traded funds geared to match your preferences. The service then monitors your portfolio and can rebalance it as different investments rise or fall, ensuring that your portfolio maintains your target allocation despite what the market's doing.

Benefits of automated investment advisory services

Using an automated investing platform, like Schwab Intelligent Portfolios Premium™, can help reach your goals in two ways.

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Benefits of automated investment advisory services

Using an automated investing platform, like Schwab Intelligent Portfolios Premium™, can help reach your goals in two ways:

  • by helping to identify an appropriate asset allocation for your situation

  • by helping to prevent emotion from undermining your portfolio

 

What's wrong with emotion? Nothing, in the right setting.

But being rational is hard when it comes to your money. For instance, you may be tempted to hold on too long to an investment that has lost value, hoping the price will rise again-at least enough for you to break even. This is kind of loss aversion can prevent you from taking the right steps for sound portfolio management. Conversely, when markets are frothy, overconfidence can prompt you to ignore diversification and periodic rebalancing, setting you up for losses when your "winning" investments reverse course.

Get a portfolio recommendation that is right for you.

Learn more >>

Do you need help?

See how one artist overcame missed opportunities to make the most of his finances.

You don’t have to do this alone.

A planning professional can help you nail down your goals and set realistic milestones to help you achieve them. A professional can also help you pull together the right mix of investments for your situation.

Putting your financial future in the hands of a stranger can feel unsettling. You’ll want to make sure you’re comfortable with your planner not only as a person, but also with his or her investing philosophy and approach to serving clients.

 

 

See how one artist overcame missed opportunities to make the most of his finances.

So how do you get
to know a planner?
Start by asking questions.
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Start by asking questions:
<p>Financial advice isn’t all or nothing. Ultimately, you're in control and should look for the level of service that best suits your needs. For example, if you just want help keeping your portfolio on track, you could simply check in with an advisor when you want to discuss strategy or review investments. For a little more help, you could arrange to meet on a regular basis. Either way, it’s important to make sure you’re comfortable with what a prospective advisor offers.</p>
<p>Do you want to meet in person? Do you prefer to talk over the phone? Would video chat or email work best?</p> <p>Find out what the options are.</p>
<p><span><span><span><span><span>Brokers are set apart from investment advisors by how they are paid and the standards they are held to.&nbsp;Brokers' compensation is based on the products provided and are usually in the form of commissions.&nbsp;They are held to a suitability standard, which is to say the investments must be "suitable"&nbsp;when compared against the client’s objectives, financial stature&nbsp;and risk appetite.&nbsp; </span></span></span></span></span></p>
<p><span><span><span><span><span>An investment advisor‘s compensation typically comes from fees charged either as a percentage of assets under management or a flat fee.&nbsp;They are held to a fiduciary standard which not only requires that the investments recommended are in the best interests of the client, but also the client’s needs come before the needs of the advisor (i.e. the recommendation must be in the best interests of the client and not, for example, be made in the interests of &nbsp;compensation to the advisor).&nbsp; &nbsp;</span></span></span></span></span></p>
<p><span><span><span><span><span><span>Don't be afraid to ask this, as it can tell you a lot about the type of advice you may receive. Does the planner receive commissions on the products you buy or sell? <a>Some planners charge a fee to build and oversee your portfolio, which can either be a fixed amount or a percentage of your total assets</a></span></span></span></span><span><span><span><span>. Additional fees may be assessed for redemptions, wire transfers, failure to maintain a minimum balance or other reasons.</span></span></span></span></span></span></p>
<p>This may sound like industry jargon, but the question of whether an advisor will act as a fiduciary can matter a lot about the service he or she provides. Simply put, a fiduciary is legally required to act in the client's best interest. For example, imagine a client wants a broad-based stock fund. The advisor’s firm offers one, but so does a competitor—and the competitor's fund has lower operating expenses. All else being equal, the fiduciary should recommend the lower-cost option, while a broker using the suitability standard could recommend the in-house fund.</p>
<p><span><span><span><span><span>The financial services world is full of professionals—brokers, investment advisors and financial planners, to name a few. But they're not interchangeable. For instance, brokers buy and sell securities—such as stocks</span></span></span><span><span> bonds or mutual funds for commissions—while investment advisors provide advice about securities for clients for a fee. Both must be registered with different &nbsp;regulatory bodies.</span></span></span></span></p> <p><span><span><span><span>The financial planning profession doesn't have its own regulator. A person who is regulated by another entity—an accountant, for instance, or an investment advisor—can also offer financial planning services.</span></span></span></span></p> <p><span><span><span><span>However, some financial planners hold the Certified Financial Planner designation, or CFP®, issued by the Certified Financial Planner Board of Standards. A CFP holder must complete a comprehensive course of study, pass a certification exam and continue to meet professional and ethical standards.</span></span></span></span></p>
<p><span><span><span><span>Again, “trying to beat the market” or otherwise chasing returns by jumping on a hot new product are not the same as following a philosophy. Does the advisor have a disciplined, transparent approach? It’s also important to understand that some financial planners sell investments, insurance or other products—or work for a company that does. In such cases, recommendations could revolve around the products or services they sell. An insurance agent, for example, may be able to discuss insurance products, but not tell you much about investment choices such as stocks bonds or mutual funds.</span></span></span></span></p>