It is vitally important for the individual to set up a personal financial plan in order not to experience hardships and financial difficulties in the future. Financial plan assure financial stability and financial freedom that one wants to possess till the end of his/her life. The following essay will speak about the role of the financial planning for the retirement years and will state that people without financial plans face substantial pain/suffering/unhappiness in their retirement years.
The process of developing a sound financial plan is a routine process that indeed involves not only careful financial analysis of the person’s current situation and long-term commitment to implement and monitor that plan throughout his/her life, but also requires careful thinking for the future. In order to properly achieve the financial planning goals, one has to monitor the performance of the financial plan as well as make proper changes when necessary. Thus, in order for the plan to remain of use for the person and not a fortune for financial advisors, one has to make it user-friendly and elaborate.
For example an article How to manage your money, noted that one is not able to compete well without the resources and thus has to read a lot about the market (Macklem, Katherine, 2004). One should weigh all the pros and cons of mutual funds namely, criteria for selecting stocks, the fund managers, and track record.
Katherine Maclem (2004) states that one should do the homework to assure profitability of one’s investment (abstract Para 1). One should understand that professional investors also get wrong, as it was the case with Larry O’Brien who advised his clients to sell tech stocks while he was buying and holding them. As result of such unfortunate trick he lost over $2million.
One should understand that over a long period of time, the stock market raises thus one should understand that if investing in all market (market indices) one has only the opportunity cost to lose.
One should understand, according to the article that stock market isn’t the only investment opportunity and real estate indeed sometimes can be rather profitable. The article notes a case with a woman who after spotting an arbitrage opportunity with a triplex used it to buy the building and lease two out of three flats to pay for that building (mortgage). With time she would acquire the fourplex and six-piece building and keep investing money in these (strangely) never-ending arbitrage opportunities.
From the information contained in this article one can understand that people without financial plans are at a great financial disadvantage compared people with sound financial plans. Thus, if happiness comprises financial security and strength, while pain/suffering usually means the lack of happiness, we can say that people without financial plans indeed incur more suffering compared to whose who have plans, based on this monetary constituent of happiness.