Hi everyone! I'm Anine Sus, the assistant editor at AAII. If you're new to investing or know someone who is, last year I started a blog called My Investing Discoveries. I started this blog to document my experiences as I begin investing so that others can follow and begin their investing journeys along with me! I've been using AAII's tools as my guide, but I'm just now getting to the PRISM Wealth-Building Process on this journey. My latest blog post details how I got through PRISM Step 1. You can read the full blog post below:
Now that I have something of an investment strategy in place, it's time to take a closer look at how my money will be allocated to my financial goals. The AAII PRISM Wealth-Building Process, created by AAII Journal editor Charles Rotblut, is a five-step method for aligning my investment decisions with my goals.
The first step of PRISM supplies seven lessons and three worksheets to help determine what my goals are, why to start with them, the key components of my goals-including the timing and wealth required to fulfill them-and the importance of prioritizing goals as a jumping off point for building wealth.
I learned that in order for a goal to have any standing, it has to be personal to me. Though it doesn't need to be the highest priority in my life, it has to be something that I care about and am willing to achieve. Otherwise, I could spend the rest of my days in bed watching the sun go up and down (just kidding, there's no sun now that it's December!).
Once I define these goals, they will begin to drive the decisions I make with my money. Charles suggests starting with life stages. What do I want to do with my money at different stages of life? I have a mix of short-term and longer-term goals, but I'm not really sure about the intermediate term.
I'll admit, some of the worksheets went a bit over my head, but the main Prioritizing Your Goals worksheet was the most helpful. Here I was able to enter my goals, the number of years away each goal is, the amount of time I will need to spend on the goals, their priority, estimated cost and any comments I have about these goals.
My goal that is most imminent is making another $2,000 lump-sum investment into my Schwab brokerage account. Since my plan is for this to occur on the first trading day of January 2023, this goal is my highest priority and will depend on me sticking to my savings schedule.
Next on my list is a little heritage tour of Europe I've wanted to go on for years. Germany, Hungary and a little village in what is now Poland where my great-grandfather grew up before he left for the U.S. are high on the list. It will probably also include eating my way through Italy-my true motherland even though I'm 0% Italian! I haven't entirely planned out the trip, so my cost is super estimated here.
Buying a house or piece of property somewhere, somehow is my third goal. To be honest, I'm not even sure if I want to own property (blog post on that coming soon), but I know that I don't necessarily want to pay an increasing amount of rent for the rest of my life either. After some very vague number crunching, I came up with an estimated cost of $35,000 for this goal-but it will depend a lot on inflation and the housing market's status whenever this goal is realized.
My longest-term goal is also my lowest priority: retirement. The upside-down smiley emoji attached to it means that this is probably an unachievable goal, but it's on there anyway! I did some calculations involving inflation to figure out how much I would possibly need in the year 2062 when I might retire (that's not a real year!). Charles discusses how some of these goals will be more realistic and others more aspirational. Retirement is a fever dream at this point for millennials and younger generations, but AAII's lessons always keep it in the back of my mind. One thing that lessened the pain of just how aspirational retirement is for me was when Charles noted that even long-term goals don't need to be fully funded by the time they are met. Retirement is an example of a goal where I could still be in the accumulation stage of building savings but be able to retire with what I have at the time.
Follow along with me as I venture through the PRISM Wealth-Building Process and solidify my financial plan for the future!
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Anine Sus
Assistant Editor, AAII
Chicago, IL
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Original Message:
Sent: 10-05-2021 11:03
From: Jenna Brashear
Subject: Lesson 1: Prioritizing Your Goals
Think of a big goal that is important to you. Imagine what would happen if you reached that goal? Now, think about how you are going to achieve that goal. As we explain, the PRISM process is designed to help you create a plan to make that goal a reality.
Reflect
We have asked you to think about your life in an emotional aspect. Whether it be going on annual vacations, sending your children/grandchildren to college, retiring in your dream house, or saving up for emergencies, it's important to consider how your investment decisions might affect these goals.
Engage
What are your top three goals and how could choosing the right investments make those objectives a reality? Let us know in the comments by clicking "Reply" on the right side of this post.
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Jenna Brashear
AAII Community Manager
Chicago, IL
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