Goal Setting and Accomplishment

Posted on February 13, 2022 by admin

“Since “someday” never appears on the calendar, our good intentions don’t turn into action until we create deadlines.” Amy Morin

A staggering 92 percent of Americans that set New Year’s resolution goals never actually accomplish them, according to research by the University of Scranton.

But, when people followed two simple concepts — setting specific and challenging goals — it led to higher accomplishment of goals 90 percent of the time, according to research by Dr Edwin Locke and Dr Gary Latham. Basically, the more specific and challenging the goals you set, the higher your motivation toward hitting them while your easy or vague goals rarely get met.

Here’s an example: If your goal between now and the end of the year is to, say, lose 20 pounds, that may be challenging, but it’s not specific enough.

It’s essential to eliminate vagueness and make it more achievable by stating it in a more detailed manner: During the month of August, I will lose five pounds by cutting off refined sugar, breads, and all fast food. I will also walk briskly for twenty minutes every day.

On the flip side, goals that are too difficult to accomplish don’t get met either. While it’s important to challenge yourself, nobody completes a goal when he/she is overwhelmed by the magnitude and difficulty in accomplishing the goal.

If you find yourself with such a scenario, break down your BHAG (Big Hairy Audacious Goal) into smaller bites you can actually chew. Use the same process of defining specific and challenging marks to hit when mapping out the smaller goals that will lead you to your final destination.

Additionally, those who succeed at accomplishing their BHAG, they tend to want it badly. So, it’s essential to determine what is your level of commitment? Are you totally committed to reaching your goal even when obstacles occur along the way? Are you committed to “do whatever it takes” to reach your destination. And, do you have the desire or passion to pursue the goal to reach it.

According to Locke and Latham’s research, there are five goal setting principles that can improve dramatically your chances of accomplishing your goals:

Setting Clear Goals. Write your goal down and be as detailed as possible. Use SMART, and consider putting your goal into the form of a personal mission statement for added clarity. Think about how you’ll measure your success toward this goal.
Setting Challenging Goals. Look at your goal. Is it challenging enough to spark your interest Also, identify ways that you can reward yourself when you make progress. Incremental rewards for reaching specific milestones will motivate you to work through challenging tasks.
Staying Committed. Stay committed by using visualization techniques to imagine how your life will look once you’ve achieved your goal.
Gaining Feedback. Schedule time once a week to analyze your progress and accomplishments. Look at what has and hasn’t worked, and make adjustments along the way.
Considering Complexity. Break large, complex goals down into smaller sub-goals. This will stop you feeling overwhelmed, and it will make it easier to stay motivated.

“Even if your goal is something that will take a long time to reach — like saving enough money for retirement — you’re more likely to take action if you have time limits in the present. Create target dates to reach your objectives. Find something you can do this week to begin taking some type of action now.” Amy Morin, Psychotherapist and author of ’13 Things Mentally Strong People Don’t Do’

Additionally, the following strategies can increase your likelihood of accomplishing your goals:

Break goals into manageable chunks. If you only focus on the big picture, it’s easy to put things off until later. But, if you break those goals down into smaller, more manageable objectives such as, you can start tackling and accomplishing the manageable chunks today.
Establish “now” deadlines. Even if your goal is something that will take a long time to reach – like saving enough money for retirement – you’re more likely to take action if you have time limits in the present. Create target dates to reach your objectives. Find something you can do this week to begin taking some type of action now. For example, decide “I will create a budget by Thursday,” or “I will lose two pounds in seven days.”
Turn abstract ideas into concrete action steps. Abstract ideas encourage inactivity. Saying, “I’d like to be healthier,” won’t help you reach those goals. Establish concrete action steps that you can start doing today. For example, decide that you’re going to take a class, read a book, or conduct 30 minutes of research each day. Identify behavioral changes that you can begin working on immediately and you’ll be more likely to turn your abstract ideas into reality.

Identify some of those goals and dreams that you’ve always wanted to work on but just never had the motivation to start. Look for strategies that will help you view those goals in terms of the present and you’ll increase the likelihood that you’ll start taking steps to turn those dreams into a reality, explains Amy Morin

Goal setting is something that many of us recognize as a vital part of achieving success in the areas of health, wealth and emotional well-being. Understandably, goal-setting research confirms the usefulness of SMART goal setting.

To use the results of the research, you must set clear, challenging goals and commit yourself to achieving them. Be sure to get regular feedback on your progress towards achieving your goals. Also, consider the complexity, and break your goals down into smaller chunks, where appropriate.

If you follow these simple rules, your goal setting will be much more successful, and your overall performance and accomplishment rate will improve.

The path to building wealth and financial freedom is paved with goals!!!

References:

Inflation…a “Hidden Tax”

Posted on February 12, 2022 by admin

Inflation means there is more money out there chasing the same number of goods and services.

Inflation is an economic situation in which the general price level in the economy increases over a period of time, increasing the market value of all goods and services in monetary terms. As the general price level rises, the quantity of goods and services each unit of currency can buy decreases, indicating a decline in the purchasing power of the currency.

A little bit of inflation is considered by economists to be good for the economy. Technically speaking, inflation gets the economic ball rolling, greases the wheels of commerce, and stimulates the economy. The Federal Reserve has set as a goal 2% inflation.

Most people and politicians believe that inflation is just rising prices. That is not quite true. Inflation means there is more money out there chasing the same number of goods and services. As a result, the value of the money is diluted. One result is higher prices. Thus, there are two different types of “inflation”.

The first kind of inflation is “monetary inflation” i.e. an increase in the overall money supply. This is accomplished by a complex process between the government, the central bank, the open market, and the member banks.
The second form of inflation is an increase in the price that consumers pay, which is the result of an increase in the money supply and it is more accurately called “price inflation”. Price inflation reduces our purchasing power (as prices rise each dollar in your bank account buys less) and thus makes us poorer.

Because things are getting more expensive and savings are becoming less valuable, inflation discourages saving and encourages spending. This is how it “stimulates the economy” but it also encourages misallocation of capital. Because people are motivated to spend now, they end up chasing short-term goals rather than long-term goals which might actually have been more beneficial and in their best wealth building interest; but they no longer appear so because of the distortions caused by inflation.

Inflation is a long used, secret method of taxing people without their knowledge, a “hidden tax”, because the recipients of inflated money are unaware that it is really worth less than they thought it was; it is certainly “hidden”. And because the primary beneficiary is the government you can rightly say that inflation is a “hidden tax”. Every time someone has to pay an increased price for what they want they are paying this hidden inflation tax.

Inflation is like if a person were to slowly add a little water to the milk that is sold in the store. For a while, no one might notice at all. However, the milk is less nutritious, and won’t taste quite right. Eventually, the people wake up and realize the milk is not nearly as good, although it might still look okay. That is the impact of inflation

When extra money is printed up and put into circulation, it costs the government very little. It seems like governments can create value out of nothing. It is wonderful for the government, which is why most governments do it all the time. The government can spend the money on all their pet projects without worrying about their constituents complaining, because the money seems to be “free”.

However, it is not free and there are consequences to unconstrained printing money. What printing money does is to slowly dilute the money that is in existence already, like diluting the milk in the analogy above. So all the money the people already have, including all their savings, salaries and all the rest, slowly start to be worth less. In this sense, inflation is a very hidden tax, or way the government confiscates the people’s real wealth.

References:

Long Term Investing

Posted on December 17, 2021 by admin

“No matter what the market is doing, no matter how it’s performed, there is always a smart-sounding excuse to sell that is very often regrettable in hindsight.” Motley Fool

Over the past century, research continues to demonstrate that staying invested in stocks over the long term has consistently outperformed every other investing strategy. Since, you can’t predict (or time the market) with certainty and you can’t meet long-term goals with short-term investment strategies.

Stocks have outperformed most assets such as bonds, real estate and cash, over the long run. Ideally, anyone with more than 10 years to invest would buy stocks at good prices and exercise patience. Stocks return 7% to 9% a year over the long run — better than any other asset class. But that can be misinterpreted to imply that stocks return 7% to 9% every year. While the long-term average annual return works out to 7% to 9% a year, what happens in between is wild and chaotic.

Investing is just a fancy word for making your money work for you!

Taking an appropriate amount of market risk is necessary because it’s difficult to meet long- term goals with only short-term investments.

It is widely accepted that there are risks of losing your hard earn money money when you invest in stocks, bonds and mutual funds. However, what is less well known and not widely discussed are the greater risks in not investing in assets. Over time, cash loses purchasing power and value.

Yet, in December 2020, households were holding about $16 trillion in cash, according to Motley Fool. Having this much cash on the sidelines is risky. By not investing your money and keeping it in cash will certainly result in your money losing purchasing power due to inflation and may result in you not achieving your long-term financial goals by having money sit on the sidelines.

Ultimately, it’s important to remember your long term financial goals, why you’re investing and to understand the risks of not investing.

According to investing guru Jeff Gundlach, the single biggest reason why most retail investors fail is simple: Their money flows in and out of assets at exactly the wrong time — in just when things are expensive, and out just as they’re cheap. “Volatility scares enough people out of the market to generate superior returns for those who stay in,” Wharton professor Jeremy Siegel explains.

There’s simply too much uncertainty, and no one can accurately predict or time the market. To successfully time the market, it requires a level of precision that nobody’s been able to achieve. Always remember, only a small number of days provide a huge proportion of total growth. Missing them can completely derail your long-term performance.

Bottomline, you should be invested should be in the stock market right now. And, the best way to build wealth is to be invested in stocks, stay invested, and not get scared out because of temporary fears and market volatility.

“The single biggest reason why most investors fail is simple and widespread: Money flows in and out of assets at exactly the wrong time — in just when things are expensive, and out just as they’re cheap.” Morgan Housel

References:

The Ultimate Growth Stock – Amazon

Posted on July 23, 2020 by admin

Amazon’s stock price continues to soar since the company first sold shares to the public on May 15, 1997.

The initial public offering (IPO) was priced at $18 per share. There have been three stock splits*, all between 1998 and 1999. Two of the splits were 2-for-1, while the other was a 3-for-1 split, according to Motley Fool (Fool).

If you invested $1,000 at the IPO price of $18, you would have purchased 55 shares. You would now have 660 shares after the three stock splits. Those shares would be worth $1,985,280 at today’s high price of $3,008 per share making you an Amazon millionaire. The total return from that initial $1,000 investment would be about 36% compounded annually, or a total return of about 198,000%.

Investors who stuck with Amazon’s stock through the harrowing market volatility and the bursting of the dot-com bubble around the end of 1999 and 2000 would have been handsomely rewarded for their patience and long term perspective.

The stock soared from a split-adjusted IPO price of $1.50 per share to $106.69 per share on Dec. 10, 1999. From there, it proceeded to fall 96% until it bottomed on Sept. 28, 2001, at $5.97 per share, according to Fool.

If you invested $10,000 in Amazon 11 years ago on March 9, 2009, when the S&P 500 hit its closing low during the financial crisis and the Amazon’s stock closed at $60.49 per share, the value of that investment would be approximately $467,000, today, for a total return of 4,570%. In the same time frame, by comparison, the S&P 500 earned a total return of around 255% according to CNBC.

References:

*The way splits work is that you receive more shares, but the stock price is adjusted accordingly so the value of your investment stays the same.

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Tag Archives: Long-Term

Goal Setting and Accomplishment

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Inflation…a “Hidden Tax”

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Long Term Investing

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The Ultimate Growth Stock – Amazon

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