Many confuse investing with planning.

confusionMany people confuse investing as the goal rather than planning which determines the purpose. Planning is how you determine the goal. The goal is the answer to the questions “What is it for?” and the “Why?” for the money. If you just invest without a goal, then you become victim of the whims of the markets … you can retire when the markets are up; but you can’t retire when the markets are down. Clearly you still have money regardless of whether the markets are up or down … so the benchmark is clearly not how the markets are doing. And making money puts you at risk to the emotions of fear and greed. A plan helps you recognize emotions that have nothing to do with success.

Your benchmark towards your goal is you! It is not the markets. But … without a plan you have no way to know how to benchmark progress and success. Progress is how you measure things along the way TO the goal. Success is being able to use the money FOR the goal once you get there. For example, saving for college can be measured for progress along the way TO when college starts. Success is being able to pay for college once the student is there.

The kind of adviser you get will have a big influence on this distinction as well … read the short article attached for more insight.

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