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As we approach the end of the year, many people start to think about getting their finances in order. According to recent Schwab research, those who put pen to paper with written financial plans are more confident, more engaged with their wealth and demonstrate more positive saving and investing behaviors. At Schwab, we believe there are a few key components to effective financial planning: 

1. Create a list of goals that that include how much you’ll need and a deadline. If you write down your goals, you’re more likely to achieve them. Think of them as a road map to where you want to go—and make them practical and attainable. Here’s a simple two-step approach: 

  • Step 1: Divide your goals into three categories: short term (less than one year); medium term (one to five years) and long term (more than five years). 

  • Step 2: Attach a dollar amount to each goal. For instance, a short-term goal might be buying a car or saving for a down payment on a home. 

2. Think about how much you can save or invest. In general, the earlier you start saving, the less you’ll have to set aside each year. If you start saving in your 20s, 10% of your salary before taxes each year is a good goal. If you wait until your 30s, that number may need to bump up to 15%. Wait until your 40s, and you may have to put away 30-35% each year. No matter when you begin, the important thing is to stay on course. 

3. Assess your risk tolerance. Evaluate the amount of risk you're willing to stomach with your investments to help inform how you should allocate your portfolio between stocks, bond and cash investments. For example, if you’re nearing or entering retirement, you probably don’t want to risk significant losses in your portfolio. For those types of needs, Schwab’s moderately conservative model portfolio has 40 percent allocated to equities, 50 percent in fixed income and 10 percent in cash or cash investments. A more long-term goal may allow you to be a bit more aggressive in your allocation, but always stay diversified. 

Donald Daigle is an Independent Branch Leader and Financial Consultant at Charles Schwab with over 29 years of experience helping clients achieve their financial goals. Some content provided here has been compiled from previously published articles authored by various parties at Schwab. Charles Schwab & Co., Inc., Member SIPC. 

Information presented is for general informational purposes only and is not intended as personalized investment advice as individual situations vary. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified professional. Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. 

Don Daigle 

Branch Leader 

2184 North 2nd Street 

Millville, NJ 08332 


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