![]() ![]() Conversely, if you project that the expected return provides you more capital than you need by the date of your goal, you may consider reducing the risk in order to provide more certainty that you will meet your goal. Float is an award-winning cash flow forecasting add-on for businesses using Xero, Quickbooks Online, or FreeAgent accounting software. If the expected return from the investments chosen does not meet your goal amount, you may consider increasing the risk (to hopefully achieve higher returns), or you might reduce the amount you need to reach your goal. You then need to do some rough calculations on the level of return you need over the timeframe to meet your goal and the amount of risk with your investments you are willing to accept. However, if you are investing without needing to touch the money for 10 years, an aggressive portfolio may be suitable, provided you are comfortable with the short-term fluctuations. What are you investing for and how far away is that? If you are saving for something where you need the money in a year or two, an aggressive portfolio is probably not the best option, as the returns over the short term for such a portfolio are very unpredictable and it might not meet your goal. The next step is figuring out the purpose of your investment. This process becomes much easier once you jot down what your future goals are, as it gives you incentive to work towards something bigger than your day-to-day needs. You can then use this knowledge to determine how many everyday expenses you are willing to sacrifice so that you can have more surplus to put towards future goals. ![]() Living this way doesn’t allow you to build savings and investments for longer term goals.Ī personal cash flow is important because it allows you to identify where your income is coming from and how it is being spent. The term living week-to-week applies to individuals or families who have no cash flow surplus because their total income is used to cover tax and lifestyle expenses, with nothing left over. ![]()
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