Taking planning a step further, fee-only financial planning is goal oriented and unique to the client. The focus is on determining individual financial goals and why those goals are important.
Say your goal is to accumulate $2,000,000 in 10 years. Is it more important what your rate of return is or that you accumulate $2,000,000? Financial planning says the latter is more important. What does it matter if you earned 10% on $200,000 of investments if you are spending an extra $20,000 each year? Financial planning will help you prioritize and delay gratification.
Financial planning will consider how much life insurance you need and what type of policy is in your best interest. It will consider the tax consequences of selling an investment (stocks, rental property, or business). It will look at the long-term consequences of buying a $300,000 house versus a $600,000 house.
If investing and rate of return are the singular focus then buy and sell decisions become influenced by emotions. And emotions are the biggest obstacle to achieving long-term financial success.
Personal finances is more complicated than ever. That is why it's important to have an expert team in place to help you develop, execute, and achieve your financial goals. This team should include a CPA, an estate attorney, and a fee-only Certified Financial Planner. Get them to coordinate your plan so they are all working to achieve your financial goals.
Ignore the inconsistent results of investment returns. Focus on your goals and why they are important.