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What do you want from your money? How should it work for you? A standard question most are asked by their investment adviser is if they want "Growth, Income, or Capital Preservation? Choose one." Huh? Fisher Investments Press author Michael Hanson believes that question is pretty dumb. Why? Let's take "capital preservation" first. Hanson's never known anyone who invests with the long-term idea of losing their capital. Never. So why would capital preservation be a primary goal? Seems pretty implicitly wrapped up in the idea of "investing" in the first place, doesn't it? Then there's "growth" or "income." Hanson doesn't understand those, either. Why would those two necessarily be mutually exclusive as goals? Why couldn't you have income and also a goal of growth? Generic "growth" isn’t a real goal, and a goal of "not losing money" is similarly abstract and won't work, either.
Fisher Investments Press author Michael Hanson believes these basic questions—standard in investment advisory today—are not just insufficient; they come from an invalid point of view. Namely, that investing goals should have something to do with distinctions about income and perception of risk. I don't like these options—they don't say anything about your actual goals, what you really wish to achieve. Fisher Investments Press author Michael Hanson believes a better way to consider goals is in terms of terminal value. Terminal value is a way to think about where you want things to be at the end. Figure out the end goal and then reverse engineer the plan from there.
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