Most people who develop large estates do so through a system of investments. They learn how to do something very well (maybe it’s real estate, stocks or oil), and then they keep learning more and more about their investment area so they can consistently make more and lose less.

It becomes a kind of game. The more they do it, the more it works; the more it works, the more secure they feel; the more secure they feel, the more they do it.

Unfortunately, there is no security in this concept!

Investments should be a direct solution to an individual’s personal financial problems and goals. Because all investments put money at risk, there’s always a chance that you may lose some or all of your money. If there is no specific goal you’re trying to achieve, why put your money at risk?

While we have covered some of the proper strategies of personal financial management in previous columns, let’s assume that you have developed some specific goals. Say you want to retire at age 65 with the equivalent of what you can buy today for $4,000 a month. Let’s also assume you want to send your two children to college for four years each at a cost today of $16,000 per year.

In this example, you are trying to build a retirement and education fund. As we have previously discussed, there is an exact structure in which you can accomplish these desired goals; it is the science of navigation.

The bottom-line solution to achieving any long-term financial goal is that you will need to invest X amount of dollars at Y percent rate of return for Z number of years. This becomes the solution for achieving your specific investment goal. When you calculate this properly, it will yield a number of dollars you need to invest each year to reach your goals.

However, if you conducted a man-on-the-street interview and asked people why they make investments, they’d answer, “To make a profit.” In fact, most people in the investment business try to sell people on the need to always keep their money actively invested and growing.

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While there is nothing wrong with this philosophy, investing in hopes of making a profit is like buying a rudderless boat. It might be perfectly seaworthy and it will not sink, but you cannot direct it to go anywhere you want it to.

If you fail to recognize the important “secret” of never investing without goals, you will be investing for investment sake. Why put your money at risk if you have nothing personally important left to gain in your life?

What I am saying is, why put your money at risk if you already have enough, allowing for inflation, to meet your true retirement goals and do not want to raise those goals; and if you have funded your children’s college educational goals; and if you have obtained any and all other financial goals, possibly including funding future generations’ retirements?

Think about it! Have you ever read a story of how someone who was worth $100 million or even $500 million and then went bankrupt and lost everything?

Did you wonder, “What didn’t they have that made it worth continue putting all that security at risk?”

The reality is, in those types of cases, they did have nothing to gain that they really wanted or needed. Consequently, they lost everything they had. They just got caught up in playing the game and lost sight of their real goals.

What they failed to see is that there are different processes a person must go through at different times and junctures in life.

For example, when you have nothing, the first step is setting goals. Your goals will each have a price tag, and you will need to start systematically investing to achieve those goals. This systematic investment process is similar to climbing a mountain to your goals.

However, no matter how tall the mountain you tackle, every mountain has a summit. When you reach it, you had better stop climbing or you will climb down the other side and end up back at the bottom!

What’s the best way to create true security? Once you reach your summit, stop climbing and erect a fort at the top. Claim the mountain as yours. Then you can throw your hands up in victory because you have truly won the game.

The process of building a fort in no way resembles mountain climbing. It is a very different function, but each has its own place in your long-term financial plan.

Remember: All forms of investment bear risk. You can always lose everything, no matter how much you have, as long as you stay in the game.

Never make an investment without having well-defined goals you plan to achieve.

Read more about Jody Tallal, a pioneer in the financial-advice industry, in the WND story announcing his new column.

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