Thursday, September 9, 2010

Goal Setting Actually Is Important!

Recently I have finished the book Predicatably Irrational by Dan Ariely. I read it to see if any of the irrational things human's do could benefit me financially. Well what do you know, I learned something. Actually, I learned many things, but one of which is that human's procrastinate. Yes, everyone knows this already, but what not eveyone knows is the following: By giving yourself the option to set intermediate "due dates" that are part of a greater goal, you will procrastinate less than if you are told a specific date for all goals to be complete. The experiment within the book doesn't use the example of goals, per say, but instead uses due dates on multiple papers throughout the semester. I incourage you to read the book if you want to know the details of the experiment.

I began to see the parallels between the due dates for papers and setting short/long-term goals for myself. At this point what people preached to me about setting goals when I was in elementary school suddenly had some sort of validity to it. Maybe I should read more often. I have discovered the key is finding something you like to read. I have been told this before (after all, I'm in my mid-20's) but it never really clicked until I realized what I like to read could help me with something I like even more--money.

So, here are my current goals. I will try to update these as much as possible as I come up with new goals or modify existing ones.

Short term (1 month)
  -come up with a checksheet to follow when researching to take the emotion out of purchasing stocks
  -Read all of Buffett's Letters to the Shareholders and take notes divided into topics he covers
  -Find 1 stock that I believe may be better than my worst holding now

 Short term goals (1 year)
  -Have 10,000 dollars in savings by the end of 2011
  -Have 12,000 dollars in 401k by end of 2011.
  -Not have to sell any equities because of something I missed that was available at the time of my research
  -Beat the market at end of 2011

Long Term goals (10 years)
  -Have $100,000 in liquid money (stocks, cd's, savings acct etc)
  -Have $150,000 in 401k (Final goal is 3+ million by age 60, that would be $5600 added a year with a  12% interest rate compounded annually)

These posts are not meant to be taken as investment advice. Everything written is solely the opinion of the poster.

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