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Preparing for an Investment Program

• Managing Your Personal Finances– The use of your personal funds to earn a financial

return– Personal budget is a specific plan for spending

income• Investment goals

– Personal investment goals must be• Specific and measurable• Tailored to individual needs• Focused on the future• Realistic in terms of economic conditions and

opportunities20 | 1

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Preparing for an Investment Program (cont’d)

• Questions to consider when establishing goals– What financial goals do you want to achieve?– How much money will you need, and when?– What will you use the money for?– Is it reasonable to assume that you can obtain the amount of

money you will need to meet your investment goals?– Do you expect your personal situation to change in a way that

will affect your investment goals?– What economic conditions could alter your investment goals?– Are you willing to make the necessary sacrifices to ensure that

your investment goals are met?– What are the consequences of not obtaining your investment

goals?

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Preparing for an Investment Program (cont’d)

• A personal investment program– Involves a careful evaluation of different

investment opportunities– Financial planner

• An individual who has had at least two years of training in investments, insurance, taxation, retirement planning, and estate planning and has passed a rigorous examination

– Begin by accumulating an emergency fund– Invest funds according to your plan– Monitor the plan

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Preparing for an Investment Program (cont’d)

• Suggestions to help you accumulate the money needed to fund an investment plan– Learn to balance your budget– Make savings a higher priority– Take advantage of employer-sponsored retirement

programs– Participate in an elective savings program– Make a special savings effort one or two months

each year– Take advantage of gifts, inheritances, and windfalls

Source: Jack R. Kapoor, Les R. Dlabay, and Robert J. Hughes, Personal Finance, 9th ed. Copyright © 2009 by The McGraw Hill Companies, Inc. . 20 | 4