Financial Beginner's Guide: Why a Financial Blueprint Beats Chasing Hundreds of Stock Tips
- 懶大 (Lan Da)
- 財務規劃與心態
- Last updated: September 1, 2023
- 3 min read
In this article, you'll learn:
Do you often find yourself scrolling through your phone, seeing financial experts “analyzing” the pros and cons of various financial instruments like US stocks, Taiwan stocks, and dividend stocks all day long? It’s as if following their insightful analysis will lead you to the next hot stock and earn you amazing returns.
But let’s stop and think, is that really the case?
Can these analyses really turn our chances of profit from 50% to 100%? If not, where does the problem lie?
I’m ashamed to admit that I used to be an “information anxiety sufferer” in my early days. I spent hours every day studying financial reports and tracking market news, feeling that I was lazy if I didn’t do my homework. As a result, a small market fluctuation seemed to undo all my previous efforts, and my emotions went up and down.
Because I wanted to “seize every opportunity” too much, I hesitated due to over-analysis and missed some of the simplest long-term layout opportunities. That’s when I realized that what I lacked was not more information, but a solid “plan.”
Why are we always busy with “analysis” but still poor?
In this era of information explosion, we can easily fall into a misunderstanding: mistaking “analyzing tools” as “achieving goals.”
We spend a lot of time studying which ETF is better and which savings insurance has a higher interest rate, but rarely ask ourselves these fundamental questions:
“What exactly am I investing for?”
“How much risk am I willing to take to achieve this goal?”
“What kind of life do I want to live in 5 years, 10 years?”
Without answering these questions, no amount of analysis will get you anywhere. It’s like a ship without a destination, no matter how powerful the engine is, it’s useless.
Financial Plan: Not Just Saving Money, But Your Life’s Architectural Blueprint
That’s why I keep emphasizing that a “financial plan” is far more important than “financial instrument analysis.”
Creating a good financial plan is like drawing up a crucial architectural blueprint before building a house for your life.
This blueprint will clearly mark:
- Your foundation (financial situation): How many assets do you have? How many liabilities? Is your monthly cash flow positive or negative?
- Your floors (life goals): How many floors do you want to build? Is it for an entertainment goal of buying a PS5 in 3 years, or a big retirement goal in 30 years?
- Your building materials (risk tolerance): What do you want to use to build? Is it solid but slow-growing reinforced concrete (such as fixed deposits, bonds), or a steel structure with great growth potential but also high risk (such as stocks, ETFs)?
Only when this blueprint is clear can you choose “tools” with direction, instead of being led by the nose by various tools.
How to Build Your Financial Blueprint, You Only Need These Four Pillars
Sounds complicated? Not at all. For financial beginners, your first version of the architectural blueprint only needs to build the following four solid pillars:
| Pillar | Core Goal | Lazy Person’s Indicator Recommendation |
|---|---|---|
| Emergency Fund | Build a financial moat | Prepare 6 months of essential living expenses |
| Risk Protection | Avoid accidental ruin | Prioritize planning for actual expense medical insurance and accident insurance |
| Short-Medium Term Goals | Make efforts worthwhile | Set goals to be achieved in 1-5 years (such as buying a car, travel fund, marriage fund, etc.) |
| Long-Term Retirement Planning | Enjoy a stable second half | Start regularly investing in market-value ETFs and enjoy compound interest |
These four pillars, from bottom to top, form your solid financial structure. With a solid foundation, you can build upwards with peace of mind.
The Blueprint is Not Dead! How to Stay Flexible and Cope with Life Changes?
Many people are afraid of making plans because they are worried that “plans can’t keep up with changes.” That’s right, life is full of variables, and your financial blueprint certainly needs flexibility.
The key is “regular review, not daily anxiety.”
The daily ups and downs of the market have nothing to do with you, but the changes in life are closely related to you. I suggest you review your blueprint every six months or a year and ask yourself:
- Has my income or expenditure changed significantly? (Promotion, job change, starting a family)
- Have my life goals changed? (Want to buy a house, want to further education, want to have children)
- Does my current investment strategy still match my risk tolerance?
The most difficult thing in executing a plan is “persistence.” When you feel like giving up, try: breaking down big goals into small tasks and making good use of automation. For example, set up a monthly salary transfer account to automatically deduct money to the investment account, let the system help you execute the plan, and reduce human hesitation.
Further Reading
懶得有結論 (Lazy Conclusion)
Having a good financial plan can help us avoid spending too much time and energy on financial analysis, and can focus more on pursuing a long-term and stable financial future. Through clear goals, comprehensive strategies, and adaptability, we can build a financial blueprint that aligns with our values and goals, thereby achieving a more secure and fulfilling life. No matter how the market changes, we can confidently face future challenges and opportunities.
You can get continuous returns without analyzing the market. If you just want to get rich overnight (sometimes you don’t even dare to think about it), it’s not impossible. But how sure are you that you can be the one who gets rich overnight?
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