Which Way Do You Want to Go?

Amyr Rocha Lima

3 min read

As a financial planner specialising in retirement, I often encounter clients who haven't given much thought to their long-term financial goals.

But, as a father of two, I know that setting clear goals and having a plan to achieve them is essential to success, in both parenting and financial planning.

This brings to mind a conversation between Alice and The Cheshire Cat from the classic tale of Alice in Wonderland, which has relevance to the world of financial planning and investment. It goes something like this:

Alice: “Would you tell me, please, which way I ought to go from here?”

The Cheshire Cat: “That depends a good deal on where you want to get to.”

Alice: “I don’t much care where.”

The Cheshire Cat: “Then it doesn’t much matter which way you go.”

Alice: “…so long as I get somewhere.”

The Cheshire Cat: “Oh, you’re sure to do that, if only you walk long enough.”

This exchange holds a valuable lesson for investors. Without a clear sense of where you want to go, it's impossible to chart a course to get there. And without a proper financial plan in place, investors are at risk of making poor decisions that could derail their long-term financial goals.

A recent study by DALBAR, a leading expert in financial benchmarking and ratings, found that investment results are more dependent on investor behaviour than on fund performance. In other words, the average investor is their own worst enemy. The study showed that the biggest contributor to underperformance is human emotion, which leads investors to sell when markets fall and buy once markets go back up, the opposite of what they should be doing.

So why do investors let their emotions control their investment decisions? I believe it's because they lack a financial plan that gives meaning to their investment decisions. Without a plan, investors are left to make emotional decisions that can have a negative impact on their long-term financial goals.

Just as you wouldn't build a home without a blueprint, or trust a surgeon to operate without a plan, you shouldn't try to build your wealth for retirement without a financial plan.

So, take some time to consider your long-term financial goals and the lifestyle you want to achieve for yourself and your loved ones. By creating a financial plan and sticking to it, you can ensure that you're making decisions that align with your goals and avoid the pitfalls of emotional investing.

Whether you're parenting or planning for retirement, setting clear goals and having a plan to achieve them is essential to success. Don't be like Alice and wander aimlessly, hoping to get somewhere. With a financial plan in place, you can chart a clear course to the future you want and achieve your long-term financial goals.

For a more detailed discussion on this topic, please feel free to contact us. Our team are always available to answer your questions and to help you with any of your financial planning needs. Here’s what we offer: A cup of coffee… and a second opinion.

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Steve & Liz Client Stories Chartered Financial Planner Strategic Wealth Partners

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Anne Client Stories Chartered Financial Planner Strategic Wealth Partners

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