First, let’s define financial success as having the ability to achieve your most important lifetime financial goals.
For many Canadians that includes assisting their children with post-secondary education and planning for a financially secure retirement. Along the way there are other objectives as well.
For example, paying off student debt, purchasing your first house, upgrading to a more expensive house, and paying down personal debt. As life continues financial priorities evolve.
To be financially successful two things have to be coordinated. Financial planning and investing.
Financial planning focuses on the big picture. What are your financial goals? How will you save and invest to reach them?
If you want to retire at age 65 consider the type of lifestyle you want to be able to afford. Then calculate how that will be funded.
Canada Pension Plan (CPP) and Old Age Security (OAS) will provide some of the funding. Are there other sources of income you can rely on in later years?
What size investment portfolio will you need to retire with financial confidence? How much do you have now, and how will your investment portfolio grow through ongoing savings and investment returns?
Consider your answers to the above questions as stage one. Financial planning based on your own specific financial needs and wants.
Stage two is about investing. A solid financial planning foundation is required to keep investing efforts on target.
Just as nobody would ever dream of building a house without a specific plan, it is a mistake to build an investment portfolio without a well-thought-out plan.
Investing poorly will likely result in failure. If not correctly implemented through prudent investing the best financial plan in the world could be unsuccessful.
Financial success is based on careful financial planning and implemented with a strong investment strategy.