BU413 Chapter Notes - Chapter 3: Goal Setting
Document Summary
Chapter 3: setting goals and the financial planning process. The goal"s outcome can be measured precisely in dollars. There is a deadline for its completion. Financial planning process: goal setting, action plan, take action, feedback (monitoring process) To reach a financial goal, an individual typically has to find an investment that matches the necessary expected return required to reach the goal. + investment income for n years on existing savings. + investment income on the annual savings, n. W0 = amount of money you have today k = rate of return that you earn on savings. Et = the money you earn in year t, other than investment income. Ct = the money you spend in year y, other than used to purchase investments. Wn = w0(1 + k)n + sum (et ct)(1 + k)n t. Example 1: goal: to have 1m after 15 years.
