FIN 502 Chapter 3: Chapter 3.docx
Document Summary
Chapter 3: setting goals and the financial planning process. Financial goal: must posses two attributes: the goal"s outcome can be measured precisely in dollars, there is a deadline for its completion. The financial planning process (for families working through its own finances): System of setting goals, devising action plans and monitoring progress. Dynamic process that requires continuous changing and monitoring. Four main steps: goal setting: specific financial goal with time completion. Ex: to have million after 15 years: action plan. Ex: to invest his current wealth of ,000, and every year for 15 years in an investment that has an expected rate of return of 24% per annum: take action. Ex: he must find an investment that has an expected rate of 24: feedback (monitoring progress) Ex: the goal of having million is unrealistic. He must re-examine his goal, action plan, and revise it/ make changes to make his goals become achievable.
