Can you believe we are almost at the end of the financial year!
Crazy how fast life seems to pass by – one minute it’s Christmas, School Holidays, New Year’s resolutions and test cricket, now it’s chilly mornings, and half the year has gone.
How are you going in terms of your financial goals?
On target and crushing it, or have you fallen into a rut and started to drift?
Its not unusual to drift a bit, as the year rolls on, but that drift can prove to be very expensive if left unchecked. Putting things off is easy and once done can be hard to resume – bit like a gym membership when you haven’t been there for a while, it seems to get harder to return to the routine.
Most investors have heard of compound interest
This is where you investments grow over time and the profits from them build into even greater returns the next year. Unfortunately, financial drift is exactly the same, but in the opposite way. That is, the missed opportunities begin to compound to the negative, leaving the “would be” investor further behind and not hitting their target.
Having a re-evaluation is an important step to keeping on track. It’s a bit like having a personal trainer – something that keeps you moving forward and accountable to yourself and your goals.
So how often do you review your financial goals and objectives?
Weekly, Monthly, Yearly, now and then?
Keeping on track is key, as time begins to slip away. Monthly is a good time to review your activity. However, a month is unlikely to be a sufficient time frame to review an investment performance, in other words, these are not the same thing.
For example, depending on your strategy, a month may not be a sufficient timeframe to evaluate its effectiveness. You may have a 3-5 year investment horizon in terms of the expectancy for a strategy so watching monthly maybe too close – a bit like checking out a view with a microscope!
Setting realistic small goals
Within our trader coaching, we work on setting small, “micro-commitment” goals for our clients. The importance of this cannot be overlooked. While the goal may be small, the momentum it creates is the critical element here, building into bigger, more significant goals.
Avoiding Financial Drift
By implementing small, regular check ups, along with micro commitments, you will be well on the way to avoiding Financial Drift and its negative compounding impact!