What Is Your Investment Plan?

Wouldn’t it be nice if we could all hit a jackpot and be set for life?

Back in January, one of my former students hit the Mega Millions for $47 million. Overnight, he earned a $46,999,999 return on his investment.

Photo by Mike Licht, courtesy of flickr

While a lottery ticket rarely turns into a winning investment, I don’t know of anything that offers a comparable return!

According to Wikipedia, the odds of winning Mega Millions are approximately one in 175, 711,536, so the rest of us will need to make realistic plans for the future.

A realistic plan may not yield jackpot results, but planning ahead can help insure that your goals and needs are accomplished.

Here are a few tips to start your plan:

1. Determine your goals and expectations – Think about your reason for investing and be realistic with your expectations. Some common reasons to invest include wanting to buy a home, sending a child to college or financing your retirement.

2. Examine your current status – You will need an account of your finances including items such as your income, expenses and net worth. Be sure to include every asset you own and all of your obligations.

3. Develop a plan to close the gap – Once you know where you want to be later relative to where you are now, you can explore investments to find which ones can get you there.

4. Keep an eye on the plan – Investments have risk, so no plan is guaranteed to perform as you expect it. Your investments may exceed or fall short. As conditions change your plan may need to be adjusted and that is okay.

Even if your plans change, a new plan is better than no plan!

BTW: My student chose the cash payout, so his return was reduced substantially. Nonetheless, I believe he will invest wisely!