Episode 60

Published on:

14th Oct 2021

Planning for your Financial Future to Achieve all your Money Goals

In this episode, I am talking all about how you can set yourself up for success when it comes to your money by planning for your financial future. Remember you are not just a passive observer in the money game, you are in control and you get to make your financial dreams a reality! Listen to find out the most important questions that you must answer to begin planning for your goals. And I share how goal planning can help provide clarity when it comes to investment selection as well. It’s time for you to be the boss of your money!

About the Host:

I am a financial professional, who specializes in helping people to achieve their financial goals. My absolute passion is creating new possibilities in people’s lives by showing them the ropes when it comes to money. I’m here to spark healthy and positive conversations around wealth and investment and create a world where nobody is limited by their financial situation. I believe this begins with education and shifting our relationships with money. I love getting to witness people achieving their most ambitious goals and creating new possibilities for themselves and their families!

I love your questions! Reach out to me anytime at:

Email: kalee.boisvert@raymondjames.ca




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Kalee Boisvert:

Welcome to the wealth and wellness podcast with me Kaylie Bob air, I specialize in helping people to achieve their financial goals. I have a love for all things numbers, and I'm passionate about financial literacy. My goal is to spark healthy and positive conversations around wealth and investment, and create a world where nobody is limited by their financial situation. But wealth is just one piece of the equation of living our best lives. So join me as we explore both wealth and wellness topics. From your net worth to your self worth. Get ready to take confident action.

Kalee Boisvert:

Hello, this is Kaylee. And I'm so honored that you have chosen to spend your time listening to this podcast and this episode, in particular of the wealth and wellness podcast. This episode is going to be a wealth focused one. And it's a very important one, since we're talking all about planning for your financial future. So what is more important than that, right? Okay. So when it comes to your financial future, the reality is, if you want to achieve your goals, you have to actually get clear on what those are. And then of course, set the goals and plan for how you're going to achieve the goals. And when it comes to your money and your financial future. You don't have to be a passive observer. I think too many times people, you know, see money and their financial future is what is happening to them. But it's so important to remember, it is your money, and it is really up to you, and you are in control. So now now that you're like okay, yes, like we're empowered, we're in control, it can feel also a little overwhelming. So you know, things like procrastinating putting off to a later date all seem like the easy solution. Because you know, it's if especially if it's something we're not comfortable with, not something we're used to doing, it's new, you know, you might feel better about just let's just do this another time. But as with anything new, you know, it is going to take you some time, some energy, some effort, some learning, and it can be uncomfortable and overwhelming. But it is going to get you closer to achieving those goals, right. So doing nothing is not going to get you any closer and then doing something of course taking action is really key. So when it comes to putting your money, you know, or sorry, when it comes to your money, putting it off really is the worst thing you can be doing. And I stress this in all my podcasts when we're talking about money, finance topics. You know what it's all about taking action, it's all about doing things sooner than later. Because you're literally losing money by procrastinating when it comes to investing, because you're missing out on the impact of that compounding growth, which really, a key piece of compound growth is time. So it needs time for compound growth to work its magic. And so by taking action, taking these steps now, rather than putting them off for another day, you know, that's how we can make sure that we're achieving that. Okay, so I want to spend this episode talking specifically about financial goal planning. You can have a variety of goals with various timeframes. When it comes to your money. Maybe it's things like save for a down payment on a home. Or maybe it's a big event, something like a wedding or a once in a lifetime vacation. Maybe you're a parent, and you have children and you want to be saving and a goal is saving for their education funding. And I think you know, one of the biggest goals and one that is probably common to most listeners on this listening in on this podcast would be retirement. So that's a big goal that I would say you know, is kind of an ultimate goal for most people when it comes to financial goal. And for retirement I also like to refer to it as financial freedom. So I use those two interchangeably, financial freedom goals, retirement goals, because I think especially for young people, it's hard to conceptualize, you know, retirement, when they're maybe just getting started in their careers and, and it feels like it's so far off that it sounds a little bit out of touch. So I think you know, people like using the term financial freedom a little bit more, and the sooner you can start planning for this, the better. Retirement looks so different for everyone and there is no one size fits all solution. Some people want to keep doing what they're doing for their careers well into their 60s or 70s. But maybe, you know, later on, they want to just be scaling back or doing it more on a casual basis. So that that's also to why use the term financial freedom because finance Freedom really just entails that you're financially free, you're financially able to stop working, that you don't require any further income to meet the goals. But perhaps you're still doing different types of work, maybe it's contract work, jobs, things like that, but you're doing them more as for, you know, hobby or enjoyment or just for the love of what you're doing rather than for the paycheck. So that's financial freedom when, when you're sort of at a place or financially, it's not that you need any extra income or need any money further to be coming in. But you're, you're in a place where you could could completely stop working, maybe you want to keep doing some sort of work, maybe you want to volunteer, again, it looks different for everyone. So getting specific on your financial goals, and creating a plan to work towards them is vital to being in control your finances, and making those financial dreams a reality. So perhaps you have a vision board of all the things you're working towards. And I love that idea, I'm such a proponent to of having this vision board of what it is you're looking to achieve, spending some time in creating that with, you know, with pictures with words of what it is that you want for your life for your future. And, you know, doing this planning, taking time to actually think about your financial future and plan it out. Well, that's really ensuring that these these goals, what you have on your vision board, this vision that you have of your future, that you want to ensure it comes to fruition. And it's important to create the steps to get there because I'm also very, you know, an analytical person as well. And I do know that

Kalee Boisvert:

having the goals is step one, but it's also about creating and taking the steps to actually achieve them and get there right. So that's what this planning is all about and what you're setting out to do. I believe outlining your goals and having a plan in place is your critical first step. So just getting clear on what are your goals, what would you like to achieve? investing is going to be a huge part of building your wealth. But it's very short sighted to just throw your money into the stock markets at some investment options prior to getting clear on your goals first. So investing is a very important piece of building wealth. But kind of we have to take a few steps back I think people want to jump in and just go to that part of the investing part and the you know, making money and the compounding and the growth. But we do have to step back first and say, Well, what is it that I'm trying to achieve? What do I want? When do I want to achieve that? How much am I going to need? And we'll go into those questions specifically. But, but that's about the planning. So investing is one piece of it, but we need to do the planning and really understand your goals first. And then the investing side actually gets a little bit easier. The more time that we spend on planning and understanding Well, what is it that you actually want to achieve. But this just kind of diving in and just investing sort of blindly in the stock markets or different types of investment is really how the industry used to operate. There's, you know, the kind of The Wolf of Wall Street View, or they're stockbrokers and they're calling up clients, or maybe they're just even cold calling random people for the first time. And they're just pushing an investment product, they're saying, you know, I think you need to sell this, or sorry, buy this product, it's great. And they're, you know, stating all the reasons why, just for the sake of, you know, making that commission and selling this prod product, and sort of moving on to the next one. So it was more of a sales approach. And that's historically how this investment industry worked. And it's changed a lot over the years. And there is you know, now this priority and so much time now spent on focus on understanding our clients, getting to know who they are what they want, and then we can go into the investing step of things. So we were kind of, you know, jumping in a little too early with those sort of investment recommendation. Just imagine like, Can you imagine someone who knows literally nothing about you, giving you a recommendation on how you should invest your life savings? Like to me that seems just very frightening to think that someone could just you know, completely come in blindly not ask a single question and just say hey, this is it you need this invest this way. That's that's really scary because it's no questions asked no understanding of well, what is it that you actually want to achieve? So even with investments, it does, start by having a clear understanding of goals. Whether you're investing independently, or working with a professional, it's important to take time, right take time on these goals. So when it comes to outlining goals, and coming up with a plan, this process can be done by yourself or again, you can work with it. financial professional to do this, there's a lot of options out there. And it really depends on your preference and what works best for you. So if you're a planner, by nature, you love spreadsheets, and you know all those things, the intricacies of numbers and, and you know, churning it out and seeing it all happen, then maybe this is a task that you're going to take on and do yourself. And if you're someone that maybe likes to talk through things, have someone that is there to hold you accountable, taking someone to take care of some of the details, maybe you're not as much attentive to details, or even just take over, you know, the math and the calculations and things like that, then you might want to consider working through this planning process with a financial professional, okay, so I'm not going to give you advice or sway you in one direction or the other. Again, there's tools on the internet and things like that, where you can very much do this independently. And then as well, working with a financial professional, most financial professionals will offer some sort of planning service with their offering. So it's a great question to ask, if you're already working with a professional, or just out in the market, you know, looking to work with someone, that's something you can definitely put out there. And your question when you're interviewing is, you know, do you do financial planning? Is there someone on your team that does financial planning? What does that look like? Okay, so step one is just getting clear on your goals. So you know, this is really kind of a piece of the work that can be done with just you because it, it could be as simple as just sitting down with a notebook, and getting really clear on what is it that you want? What is it that you envision for your financial future. So financial goals, you likely have more than one in place.

Kalee Boisvert:

Most people, you know, have a variety of different goals that they're looking to achieve. So maybe it's something like buying a vacation property as one goal, and then maybe another, you know, another goal is planning for your retirement, you know, maybe it is that you only have two, maybe you have three, maybe you have several, having a variety of goals is completely okay. But make sure you do include each one of those into the plan, make sure you do get specific on each one of those goals, you don't want to neglect or forget about a goal, right. And then as life changes, be sure to do this, you know, come back and check in again, and review and make those changes. So of course, planning today might look very different than when you're planning 10 years from now, or 20 years from now, maybe you're in the early stages of your career, you know, you're single, you're in your 20s, things like that. And then maybe later on, it's you get married, you have children, things are really sort of advancing in your career, and then that's going to look a lot different for what goals are at that stage of life versus right now, but still, again, no time like the present. And there's still going to be goals on your radar. And again, like I said, one that's going to be common probably to everyone is that financial freedom goal, whether you're young and just getting started or later in life. And that's more of a you know, reality, something coming up sooner than later. That's still an important goal to plan for and think about. And again, no time, like the present, always better to start sooner than later, no matter where you are in your life. So when it comes to outlining and planning for your financial goals, so taking that time, like I said, to write them down to get specific, get clear, you know, start really brainstorming and working through it. Here's some great questions that you can actually answer for this for each goal. Okay, so what are you saving for? Question number one, is, what do you save me for? Question number two, how much will you need? So what is the dollar amount? How much will you need for that goal? When will you need this money? So third part is, when is this needed? And then the fourth part is just kind of understanding your risk tolerance and your level of, you know, knowledge and investing. So what is your tolerance for risk? And what is your level of investing? knowledge? So those are kind of the four questions that I would suggest, you know, writing out and answering. So what are you saving for? How much will you need? And when will you need it? So those three are key for each goal, but also take some time to say, you know, what's your tolerance for risk? And that can be a little bit different for each goal. That's why I added it in as an extra question that you can sort of analyze with each goal, because for longer term goals, maybe your financial freedom goal, maybe it's 2530 years away, then maybe your tolerance for risk with that goal is going to be a little bit higher versus your shorter term goal. You're not going to want to take on as much risk so you can kind of answer that question on each of the separate goals as well.

Kalee Boisvert:

The what? So like going over these questions in a little bit more detail. The watch should be pretty obvious, I'm sure so just you know, what are you saving for state that write it down? The second question about how much will you need, often stumps people. So for shorter term goals, that might be a bit clear. For instance, let's say you're just newly engaged, you're planning a wedding, and you have a specific budget in mind. I don't know what weddings run people at these days can say, let's say you're planning for a wedding and your budgets $15,000. So the answer to the How much will you need, maybe it's $15,000, maybe you've already started putting some money away, and you have some of that. So your you know, your $10,000 more is what you want to add to what you currently have. But there are some goals that you might not have even considered this for. So there's some goal goals that maybe are a little less clear in your mind, one that often comes up for people that I find is, for instance, saving for your children's education. So let's say you have a child, like I, for instance, have a seven year old daughter, and I'm saving up for a university or post secondary education. And it's about having a specific goal in mind. So, you know, do you want to save for a full, you know, four year degree program? Do you want to save for a degree program in a master's program? Do you want to just save enough that you're able to help them for the first year or two years, maybe a portion of their education, or maybe it's that you want to, you know, just maybe it's a number goal, maybe you say, I want to save $25,000 for their education, that's the goal. So again, some of these goals, maybe you haven't really thought of, and it is important to really dive deeper and say, What is the goal? What does it actually look like? What is my, you know, end plan for that, because again, we need to get specific, the more specific we can get, the better we can actually then plan accordingly. And understand, okay, if that's the goal $25,000, then how much do I have to put away on a monthly basis on a yearly basis to achieve that? Um, I find also that this is how much will you need? This question is really hard or hardest for people to answer for the retirement number. So that financial freedom goal retirement goal, answering, how much will you need? It stumps, people? So if that's how you're feeling? It's completely normal to feel that way? That's often what I find. Yes, it is very hard to predict what you will spend in retirement Because ultimately, you haven't retired before, it's going to be a new experience in your life. If you're in your working yours right now and planning for that, that life transition, you've never firsthand experienced it. So you don't know really well, what is it? Like? How much does it cost? So here's a few tips I can provide to just help you work through that a little bit further. Again, if you're feeling stumped on saying, Well, how much will we need for that independent financial independence school, get some perspective on what you spend right now as a starting point. So that's one tip I would give a lot of the personal finance textbooks and articles and just books in general, they base the recommendations off for your retirement numbers, some say, you know, it's based off currently how much you spend. So they look at your lifestyle right now. And some will say, okay, you know, retirement, you're probably going to spend about 75%, of what you currently spend, or some might say, 60%, or 50%. But if you're going off that information, and if that really resonates with you, well, then step one is you're first going to have to understand how much you're currently spending. Okay, so, and the key to this, too, is, you know, don't underestimate, I would suggest, because sometimes people go Okay, you know, when retirement, I'm spending this much now, but I'm in retirement, I'm not going to have a mortgage, and I'm not going to, you know, have this bill in that bill. Well, it's important to remember though, the lifestyle you have in retirement might still look different, like you might be having more time to travel or do things. So by cutting back too much, and saying, Well, I'm not going to have this bill and that bill and that bill, and forgetting to add in these extra expenses that you're not spending right now, you know, you might be short sighted on that number. So some say, really looking at Well, what do you spend right now and planning accordingly to have about something similar or close to that in retirement make sense. And I think that's an important consideration to make, I think, you know, I see us as creatures of habit, and generally what you're going to find in your spending habits is they're quite consistent. And you get to sort of a level in life where you're, you're comfortable in where you're at, it's maybe hard to change that. So to think that you're going to have to change that drastically in retirement, that would be hard and stressful. So set yourself up for success and be realistic. Don't you know, don't underestimate that number too much.

Kalee Boisvert:

Another tip is just do yeah, think very specifically of what type of lifestyle Do you want to have? You know, are you just by nature, really frugal and don't spend a lot and that's probably going to continue? That's, that's fine. That's great. And you know that about yourself, but again, there's no right or wrong answer for this and the number of what you're going to spend there's no right or wrong answer. There's no one size fits all. But let's say you know the the lifestyle you envision is one of traveling and adventure and then you're going to want to base this number on that accordingly you're going to want you know, a comfortable number there. So what is it a comfortable retirement look like? versus, you know, what is it looked like to just survive or get by, right? I think what we want to plan here is when we're thinking about goals, and the life of your dream is like it's a comfortable lifestyle, it's this lifestyle that you really envisioned and dreamed of having as well. Another tip is just to have a few scenarios. So if you're really struggling and saying, you know, I don't know what it's going to be maybe it'll be 5000 a month, maybe it's $7,000 a month, maybe it's $10,000 a month and and that's okay, as well and those are maybe scenarios that you actually want to look at each one of them to get some perspective on what would I have to do to achieve each one of those. So don't think either that you have to be to set in one number, you can have a range or a couple scenarios that you want to figure out the number for to say, you know, what would it look like if I wanted 5000 a month? What would it look like if I wanted 10,000 a month, so you don't have to be really you know, just stuck in one scenario? And then third question was when will you need the money, it's also really important to be specific here, the more specific you can get, the better your plan will be. Okay? So if it's, you know, I need it for my children's post secondary education funding. And right now my daughter is seven and she's going to go to university when she's 18 Well, I know very specifically she's going to start needing money in her first year of university or post secondary wherever she chooses to go. And that is going to be in 11 years from now. So that's very specific on the timeframe so if you can get that specific with your timeframes fabulous. Again, if you're uncertain on the financial freedom number, you're not alone many people are and you can also in this case, consider scenarios right? You know, what would it look like at 55? What would it look like at 5758 6065 you know, you can have a few I again, I wouldn't recommend too many stairs because things can get pretty complicated if you can't, you know, you have all different scenarios on the amount and the years, you're going to have just as many than outputs to try to deal with and say Okay, which one of those makes most sense for me so coming up with maybe a few just to give yourself some perspective is what I would suggest. Um, so the next going over that part where I talked about tolerance for risk, and that what is your financial knowledge or financial literacy level, these just are going to provide further details to the investment planning side of things. So if you're an extremely risk adverse person, then that of course should be taken into consideration with how you're invested to reach your goals. Okay, so just getting clear on answering these questions, especially again, the three first question so what are you saving for how much money will you need? When will you need the money? getting clear and answering these so important and it's the most important step I would say in planning because once you have that, you know, then the next step is just the math and the numbers side of things but that that step is key that step is different for everyone that step doesn't have an answer for everyone. So once we have that, that information that's what's going to actually be the input to then how do we make it happen, how would the numbers work to make that achievable? Right so but that that process and then going through and getting really clear, that's going to be the most important step. So once you have your goals detailed, you can look for online tools or calculators like projections, retirement planning calculators and things like that there's ones available online and we're on your you know, on your bank, like online access and things like that through your bank account, and you're the bank that you work with for instance.

Kalee Boisvert:

And that can help you work out the math maybe again, you're a numbers person, you're gonna make a spreadsheet that's going to do all the math for you. Essentially, they're going to answer the question of how much you will need to make that goal a reality um, especially you know, if it's that financial freedom number and you're saying okay, I want this amount a month per month, well then how much will I have to have saved up to make that possible so they're gonna actually projected outward, the math behind the scenes and then it will give you an answer for that. So maybe it says, Okay, if you want $5,000 per month in retirement, and you're retiring at the age of 60, you will need 1 million or maybe the numbers 2 million, and it will break down then how you're going to achieve that based on where you're standing right now with your your net worth, right so important to have sort of a net worth net worth picture in mind because that's going to be the inputs of where you stand right now. I have a whole episode where I talk about your net worth statement. So if you don't have, if you're not familiar with that, if you haven't really done much work in that, I highly suggest you listen to that episode. But once you have that, it's sort of then your current amounts, where you want to get to as far as you know how much you're going to have in retirement per month, and then it's going to basically give you an output on how much you're going to actually have to save to achieve that goal. So maybe from the output, it comes out that you have to save $800 a month until retirement. So you can have $5,000 a month in income once you hit retirement year. And that sustains you 25 years for 30 years. That's another piece that you have to think about. That's a hard one to decide. So life expectancy, there's a side note that I forgot to sort of put it out to chat about. But that's going to be an important part of your calculation. And another one we don't know the answer to there's obviously no guarantees on, you know what that age will be. But what you can do is you can go off of, you know, hereditary, like what your, your family history shows, most financial planning. Financial Planning numbers usually say to project out to about age 90 at least. So yeah, if you have longevity, though, you can push that out even further. But again, that's going to be a bit of an unknown number. So you can though go with a number that you feel comfortable with for that, again, because there is no right or wrong answer. So for this, again, for this actual the calculation of things and putting these numbers in to actually get an output. Keep in mind that of course, you can do these independently using an online program, an online calculator, anything like that, or you can be working with a professional. And you know, when you're working with a professional CFP, for instance, certified financial planner, they're going to give you very detailed numbers. And, you know, this is what they do on a regular basis. So they're going to have these very detailed specifics and the programs they use are probably a little bit more robust than some of the online projections. But again, anything is better than nothing. If you haven't done this work, if you haven't done these numbers and projections at all yet, you know, just having something having some perspective on what that is what then what it looks like, I would highly recommend as well in the calculation and again, you if you're using online tool, you might want to just read, you know how it works and what's being used. But in the calculation, you're going to want to ensure it takes into consideration inflation, so that the programs of financial professionals use, they will include it, the online calculators, they might be missing this piece, but it isn't very important piece because for instance, let's say I'm talking about wanting $5,000 a month in income in my retirement years, well $5,000 today is going to look a lot different in 10 years, and 20 years from now. So you want it to have that same purchasing power. So it's the equivalent of today's $5,000 that you want to have in retirement. And that's why when the planning and they're projecting software, if it considers inflation, then it will have that that result for you and take that into consideration. Again, if you're working with a professional who is assisting you with this, they'll be doing all the calculations for you. But answering those questions again about what is the goal, how much am I going to need, when is my timeframe there very important for you to complete prior to the calculation stage stage. So it is important to get clear and as detailed as possible in your vision to provide the best results. From these projections, whether you're doing them for yourself or with an online program,

Kalee Boisvert:

whether you're doing them yourself through using an online program or something yeah, program that maybe you you find access to somewhere else, but doing it independently or whether you're dealing with professional, you will have to have some clarity on the action plan, right? It's one thing to have the goal of I want this much per month. But then the reason we're doing the calculation and the math to get well how does that work out to as an action plan for date today so we can say to you, okay, if you want $10,000 a month per year, or $10,000 per month in retirement and you're planning on retiring at age 60 then this is how much you're going to have to save up per month starting now to achieve this goal. Okay, and it's also going to help you know the more detailed the person you're working with is they might even you know they're going to go one step further probably and say you know, this is Where you will be saving it. So are you going to be putting in a tax advantaged plan or a tax deferred account, and whatnot, and they can get into the specifics on that. So another piece of the calculation is, of course going to be your investment return. Let's say the numbers show that you have to save $2 million to achieve your retirement goal, the retirement goal of your dreams. Well, the hard way would be to, for me to say, well, then yeah, go to it, go save up your $2 million to achieve that goal. And that might seem overwhelming and might not even really seem feasible based on you know, your current income, what's left at the end of the day that you're able to save, or even if you are to cut back what you're able to save, you know, saving that much amount might feel a lot overwhelming. And that's really, you know, why we invest as well, because investing is going to be working on your side, it's going to be growing, it's going to be compounding, so you don't have to be putting away that much right, it's going to help you understand, okay, you're going to have a rate of return. And the rate of return on your investments is basically the average that they're producing each year. And then compounding investment growth means that the growth on your investments will be doing some of the work for you. So how do you know the rate of return to use in this calculation, so if it's you're doing it on your own, likely, I mean, if you're working through a professional, they're likely going to use a certain return based on your risk level and the timeframe and things like that. But if you're doing it on your own and looking for a rate of return to use, what do you use? Well, unfortunately, it depends. And it will be based on the type of investing you're doing and the level of risk. Because it really has to align with with your goals, and the the risk that you're willing to take as well. But it could be, you know, I'm just gonna throw out some numbers, it could be something around 5% a year if you're maybe more on the conservative or medium range. And then if you're more on the higher level of risk and comfort level, it could be something more like 7% or 8%, annualized or even a little bit higher, if you're looking for a really growth II type portfolio. But of course, that's a piece that's going to go into the calculation, because when it comes to saving for these goals, that's going to support you and help you towards reaching that goal, you're not going to have to save as much because as it's growing and compounding, that's going to get you closer to that goal as well. So let's talk a bit further on matching your goals with your investment strategy. So the timeframe is a major factor to consider when it comes to investing for your specific goals. So let's say you're you have a goal, such as saving for your wedding, the timeframe on that is short term. So the type of you know, investing that you're likely going to want to use is going to be probably just a savings account or a very low risk investment, because it is short term, it's coming up really soon, you don't want to take a lot of risk. Saving for a down payment on a home, maybe it's short to medium term depending on when that's going to happen. And if you're actually investing that savings, in the meantime, you're probably looking for more conservative type investments, again, because it could be shorter term investing to fund post secondary education. So again, my example with my daughter, it's 11 years or so away.

Kalee Boisvert:

It would, of course, depend on your child's age, if your child's an infant, you have an even longer timeframe. But for mine, that's more medium to long term. So I can take on a little bit more risk while she's still young. And then as she gets closer to needing that money, which I know the specific date, then that's when there's going to need to be a lot less risk in the type of investing investments because she's getting closer to that timeframe where she's going to need it. And then that long term goals. So something like providing retirement income, you can have more of a, you know, higher risk strategy, again, depending on your age, but you can maybe be taking on more risks. So understanding that each different goal is also going to have an different investing strategy that comes along with it. So it's important to keep your investments aligned with the goal. So that's why the goal planning like I said, it's so important for so many reasons. It's important to sit down and get specific, because that's going to help actually plan out okay, how do I make this a reality? What do I need to do to actually achieve this? So it's helping you develop an action plan, but it's also helping you understand how do I invest to make sure it's appropriate for my goal. So, so important to first really dive deep into what those are and then again, it is important to these other decisions that we now need to make. So a major piece of you know, where the risk of investing comes into play is when you're not aligning. Your investments with the goal. So let's say you're saving for a down payment, and you're looking to buy a home sometime in the next 12 months. Well, if you put the money you have saved in the stock markets, and then the markets move down 10%, for instance, in that time period, there's a good chance your downpayment will have increased by the same amount. So maybe now you don't even have the ability to have the same budget that you had in mind for the home based on that decline that you've had in your downpayment. Or maybe it means now that you've had a goal to buy it in the next 12 months, but you're gonna have to wait for your portfolio to recover. So your it might be more like two years or more. So again, that investment decision of putting in the stock markets, which have more volatility and risk associated with them didn't make sense for something like a short term goal, like a down payment for your house. I mean, yes, on the upside, it would be great to say, Hey, I'm going to take this money, put it in the markets earn 20% and then my downpayment, you know, part of it's paid for by that, but there's no guarantees and market returns, and especially over shorter term timeframes, we know that the stock markets have increased long term. So if we're looking at 20 years, 25 years, 30 years, you know, essentially, investors have always made money in the stock markets. But when we're looking at the shorter timeframes, that is definitely a lot more variable. And there's periods, if you're looking at time periods, that short, there's ones where people have actually lost large amounts of money. So

Kalee Boisvert:

this, of course, then, of course, this was an example of a short term, but it looks a lot different when you're investing for a longer term goal. So something like a financial freedom goal, let's say the goal is 25 years away, well, you can handle a lot more fluctuation your portfolio, and you can take on higher, you know, risk to achieve those higher returns. So, for instance, maybe you're saving $1,000 a month for 25 years, at an 8% annual rate of return, that's going to grow to about $950,000 by the financial freedom date, or, you know, whatever that 25 year goal was that you're saving for, you'll have close to a million, if it's growing at that rate. If it's growing at a 10% rate, so much, you know, even higher rate of return, again, more appropriate for a longer term goal, but $1,000 put away per month for 25 years at 10% is about 1.3 million or just over it equates to. So again, that's important piece of the understanding your goals and investing accordingly. If you're not matching the types of investments with your goals, there's, there's problems there as well, because let's say you have a very long term goal. And let's say you're invested very low risk. But the goal is, you know, 30 years away, or 35 years away. And the still with the investments, if the risk level is extremely low, then with that the return potential is also very low. And you might be giving up a lot of potential compounding growth, if that number is very low. If that annual return numbers only, you know, two or 3% for that long term goal, that's really going to bring down what you have at the end of the day. So again, this planning is not just important for understanding Well, how much do I have to save? If I want to achieve a retirement of you know, having this much per month? How much do I have to put away? Now it's going to answer that question, but it's also going to help you devise or design an appropriate investing plan. So once you do some of this deeper dive and get clear on your goals, other questions are likely going to come up and the plan is the perfect tool to illustrate those scenarios. And we've got give you a peace of mind too about your the plan and your goal. So it can definitely answer some of those questions that come up for people like when should I take my CPP? Can I actually retire sooner than I had planned? What if I want to keep working? How is that going to impact it? What if I want to downsize my home and utilize you know some of the extra funds to put towards my retirement goals? What would that look like? So again, once you get these numbers, your mind can kind of keep going with all these other scenarios now of Okay, cool now, but what if this happened, and what if that happened, and those are probably going to come up for you as well down the line. So it's good to either you know, bring those up with a professional if you're working with them, or write them down for yourself to make sure you're addressing them. But do take note of some of the other questions that start to come up. As you you get into the practice of doing this and you've spent some time doing it. Remember, there's no time like the present to get to get clear on your financial goals. Okay, so no time like now get started. Again, that process of just understanding what they are writing them down can be done completely on your own independently. And it's a such an important piece right? Planning is an ongoing process. Remember that too, and it's not a static doc So, of course, it's going to feel like but you know, I'm at this stage of life right now. But you know, ultimately I want to, let's say, you're thinking, well, I

Kalee Boisvert:

want to have children and I'm, you know, I want to do this for a career and I want to eventually live here, that's fine. But let's, you know, focus on where you're at right now, and what those things look like right now for you, because again, as much as you can get clear on it right now, start working towards those right now. That's ideal. And then as changes happen, as you know, life progresses, as things change, then you can incorporate those accordingly. monitor the progress of your investments to with the results. So changing, you know, as you get older, or, for instance, we're planning for education savings, well, maybe I'm taking on a certain amount of risk in my child's account right now. But as she gets older and closer to that age of actually needing to draw the funds or take out the funds to pay for education, I really need to make sure I'm adjusting the investments accordingly to say, Okay, I could take on some risk when I had more of a tight, longer timeframe, but now she's getting closer to the age of when she's gonna need it, I need to scale back on some of that risk, I don't want to see as much volatility in the amount, I know she's gonna need it soon. And I don't want a lot of fluctuation, I wouldn't want to lose any of that, you know, I wouldn't want to have to say, you're gonna have to wait a few more years before you do post secondary, because your your registered education savings plan has gone down drastically in value or something like that. So again, we have to be adjusting, ongoing as we progress through different life stages. And also remember, you don't have to do this alone, it's important to have an active role in planning, especially in the stage where you're really looking in envisioning what it is you want to achieve. But if you want some help on the math side and actually making you know, the the plan for how you're going to make that a reality, then of course, you know, there is an option that you can work with a financial professional. But yes, ultimately, what I would say is just really start getting clear on what the financial future looks like for you. What is that financial future of your dreams. You're not a passive participant when it comes to money, and it is your money and you get to decide how you use it and what it can do. And that is all I have for you today. Thank you so much for listening in and I will catch you on the next episode. Bye for now.

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About the Podcast

The Wealth and Wellness Podcast with Kalee Boisvert
To spark healthy and positive conversations around wealth and investment and create a world where nobody is limited by their financial situation
The Wealth and Wellness Podcast with Kalee Boisvert serves to spark healthy and positive conversations around wealth and investment and create a world where nobody is limited by their financial situation. This all starts with education and shifting our relationships with money. But wealth is just one piece in the equation of living our best lives, and we cannot forget about the important link between our self-worth and net worth. Join as we explore both wealth and wellness topics, with a goal of inspiring you to take confident action in all areas of your life!