This is your captain speaking
Oct 16, 2013 / 5:00 am
So you lean back in your seat, hang up the headset and loosen your tie; bathed in the glow of light from the gauges and dials that make up a cockpit. You’ve just given the announcement to the passengers: all’s well, they can get up and walk around if they need to, flight path looks calm and they'll be home on time.
The autopilot looks like it’s doing its job, the weather appears to be cooperating and your flight plan was filed without hitch or complication. What else is there to do for the next 12 hours for the Captain of a Boeing 747 jetliner flying from Hong Kong to New York? Maybe a little nap, read a good book, relax with some tunes on the iPhone?
Not so fast; it turns out there’s quite a bit to be done. As important as it is to know the details of the flight plan, you also have to make sure that you’re on track along the route. When flying over oceans and other non-radar environments, you must send position reports to air traffic control; at designated points on the journey, you need to monitor the fuel log to make sure the fuel burn matches the flight plan (flying on empty at 35,000 ft. is a little more troublesome than when it's your 17-year-old’s gas gauge). You also need to make sure the autopilot isn’t going off the rails; so you verify that the flight management computer is following the flight plan and not deviating as a result of software malfunctions. If time permits, you might be able to study for a pending certification exam.
For investors, just like pilots, the plan and the takeoff is the first step in a much larger process. It provides a beginning, an end and a few stops along the way. The most important steps come after making sure the plan remains viable, monitoring your cash flow and direction so you stay on track and can be prepared for sudden changes.
For most investors this should mean building a roadmap that guides them through the life of the plan. A financial plan is nothing more than a snapshot with some forecasting to illustrate what might happen in the future. The real driver should always be the roadmap, a detailed schedule providing you with timing, areas of focus at set points in time, regular checks to make sure you’re on track and warning systems that help you determine if you need to make changes.
If you work with an advisor, this should be an essential part of your relationship. The roadmap should be in writing, be reviewed regularly throughout the year, be less than five years in length, and updated whenever change demands.
If you are master of your own domain, you should make a list of the important things that you need to address financially in the next 2-5 years. Determine when you need to review each topic (well in advance of the event), create a timeline to follow and as you do your reviews, lay out the action steps that you will need to take.
At the end of your current roadmap, review your progress, outline future topics, and then build yourself a brand-new roadmap.
Read more Navigating the Markets articles
- Year-end tax planning for individuals Dec 4
- Protecting investments from higher rates Nov 27
- See your future Nov 20
- Generating income in uncertain times Nov 13
- Purple cows and stock operators Nov 6
- Pay now or pay later Oct 30
- The best laid schemes Oct 23
- This is your captain speaking Oct 16
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