One of the biggest reasons investors fail to achieve their financial goals is that they don’t have a plan. They have no idea from year to year if they are on track. This is why I came up with this concept of an investment timeline.

When it comes to investing, we all have a timeline. The timeline is made up a series of years that represents our financial life. The majority of that timeline will be spent in the pursuit of saving and growing money. The last part of that timeline will be spent withdrawing and living off of that money.

Regardless of which part of that timeline you find yourself on, it is important to understand if you are on track or not. The only way you can make good investment decisions is by having a reference point along the way. Consider it like a mileage marker that tells you how much further it is to your destination.

These mileage markers represent the total amount of dollars needed at that point on your timeline so that you know whether you are on the right path to achieve your financial goals. For example, let’s say that you need $400,000 by the end of this year to be on target for your goals. Right now you have $395,000 with four more months to go. You are probably going to hit that target. However, if you start to see that total go drastically down, then you know you are falling further away from your timeline, which would prompt you to take action.

So how do you put these mileage markers together?

(1) First, determine the age that you want to declare financial independence

This is the age that you want the option to earn an income. It is a choice and not a requirement.

(2) Second, determine in today’s dollars how much you will need at that age.

You can act as if that day is today. How much do you need for living expenses? How much for entertainment, traveling, etc.?

(3) Either find a program that will run these numbers for you or have a financial advisor run the numbers for you, showing you how much money you need to have accumulated at the end of each year.

This provides you with your mileage markers. Now you have to make reasonable assumptions about the future. You have to assume that your money is going to grow a certain rate of return. You have to assume that you are going to save a certain amount, too. Finally, you have to make a certain assumption about social security.

This system, or one like it, is critical regardless of where you are on your investment timeline. It works especially well in the withdrawal years. It will tell you how much you have in addition to what you actually need. That creates options for you in the event that you want to spend above and beyond the money that you are withdrawing. The bonus is that you can do it with confidence because you know how much you have and how much you actually need.

NOTE: Investments outside of a retirement plan and old, abandoned 401(k) plans can be professionally managed. There are ways to use alternative investments that will enable money to actually grow in uncertain times. If you want more information, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

In Part 1 and Part 2, I write about why investing just isn’t working out for most people. The financial services industry wants you to believe in the concept of an absolute truth. They want you to believe that you will be just fine if you buy and hold investments for the long-term. Unfortunately, that is not a slam dunk solution to investing. It does not always work out okay if you follow that formula.

I think that the answer lies in following a new set of principles. I will start with the most important one first.

(1) Pray about how you have your investments invested

Do you ever stop and think about including God in the investment process? It is the basis for stewardship and it is the first place to start. It was never meant for us to handle money decisions outside of our relationship with Christ and on our own. God cares about these decisions just as much as you do. Pray for wisdom and for Him to make resources available to help you make decisions. Seek and look for answers and trust that God will provide you a sense of peace when you make a decision. Without that peace, don’t make a decision.

Finally, adopt Proverbs 22:3 and 27:12 as your principle for taking risk: “A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.”

God didn’t allow that verse to appear word for word twice in the same book by accident. It was for emphasis!

(2) Stay invested in stocks when it makes sense to do so.

That is a little different than staying invested all of the time. It is time to adopt the belief that it is okay not to always be invested in the stock market. You take risk by investing in stocks when it makes sense to do so and not for the sake of always being invested.

(3) Know the level of risk you are taking and be comfortable with it.

What percentage of your investments do you have invested in stocks versus how much in bonds/money markets/fixed investments? If you have 60% invested in stocks (any type of stock or stock funds) then you are taking 60% of the risk of the stock market. If you have invested 80% in stocks, then you are taking 80% of the risk of the stock market. The other percentage of your investments not invested in stocks would be assumed to be invested in high quality bond funds, money markets or fixed investments.

If you feel you are taking too much risk, reduce the amount you have in stocks.

Is this a slam dunk solution that always works? No. Remember that there are no perfect solutions. It is just one strategy that you could use.

(4) Know at all times where your investments are in relation to your investment timeline.

With an investment timeline, you know where you are supposed to be at the end of each year. For example, by the end of the year let’s say that you need to have $400,000 to be on track. Today you are sitting at $395,000. That keeps everything in perspective. This tells you whether you are ahead or behind your goals. Remember, it is a year by year process. You need to know if you are falling behind. It gives everything perspective.  

(5) Pay attention!

I am not suggesting that you micro-manage your investments on a day-to-day basis, but you should evaluate everything on a quarterly basis. Always know daily how much risk you are taking and if you are okay with it. Understand how much you have gained or lost on every time period. Learning how to interpret numbers is a process of learning. The key is to start the process.

NOTE: Investments outside of a retirement plan and old, abandoned 401(k) plans can be professionally managed. There are ways to use alternative investments that will enable money to actually grow in uncertain times. If you want more information, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

There are no absolute truths when it comes to investing; that is the absolute truth. Yesterday, I commented on an article that stated that investors had lost confidence in the stock market. I don’t disagree with the opinion, but I think it runs deeper. I think that investors have lost confidence in the propaganda put forth by the financial services industry.

The financial services industry wants you to believe:

• You can be a long-term investor and you will be just fine
• Stay invested on all counts and never attempt to time the market
• Stick to the formula because it works.

It is the gospel of buy and hold. It is as if investing were really that easy. It is easy to fall into this trap of thinking that a formula has to exist where everything is that easy. As a money manager, I actively manage money for my clients. Said another way, I don’t buy and hold. I buy and sell investments and manage for risk. I don’t believe in the myth that you can close your eyes and everything will be ok. At the same time, even though I am active with my money management, I’ve also caught myself trying to figure out the formula that works all of the time.

How did that go for me? It didn’t work out too well. It was a hard lesson that I finally learned. There is no secret formula that works consistently. Unfortunately, there are all types of companies marketing that say they have it figured it out or that they have the software program that works all of the time. I can tell you countless stories about money managers that at one time thought they had the secret formula that always works. They eventually find out that it doesn’t.

Once again, it is not that easy. The first secret to investment success is to accept that fact and attempt to make money in spite of it.  

This concept of buy and hold is so seductive for a couple of reasons. First, it is human nature to want someone to do the thinking for you. We are a culture that just doesn’t want to think and figure things out for ourselves. We want to know that if we follow the rules, we will always be okay.

Second, as investors, we are scared to death to make mistakes. The financial services industry has made investors fearful of making mistakes. They have investors convinced that you cannot time the market and that if you decide to make a change you will probably be wrong. This fear of making a mistake paralyzes investors and prevents them from making decisions.

The reality is that you will make mistakes…and that is okay.

Then what is the answer? More on that tomorrow in Part III…

Missed Part I? Click here.

A CNBC article talked about David Darst's, Chief Market Strategist for Morgan Stanley Smith Barney, speech to a group of hedge fund managers. The gist of the speech was that investors have lost confidence in the stock market as well as in politics and those in power in Washington.

"They have lost faith and trust in politics," [Darst] begins at a speech delivered to hedge fund managers. "They have lost faith and trust in the political powers in Washington." The loss of faith and trust, he says, extends beyond the stock market to societal institutions all the way to religion.

From reading the article, I don’t know what religion has to do with it. Besides the disturbing interpretation (my interpretation) that a relationship with Christ has turned into “societal institutions and religion”, I guess that God is to blame for this loss of confidence in the system as well. As tempted as I am to go there, I will go back to the point at hand.

There is no question that investors have lost faith in stocks. All you have to do is look at the numbers. You will see enormous amounts of money flowing from stocks or stock mutual funds into bonds and bond funds.   As I have pointed out in this space, I think that investors are going to find that investing in bonds is like jumping from the stock fire into the bond frying pan.

As I think about this loss of confidence, I do agree with Mr. Darst on one point: I think that this has ominous implications for the stock market. If you will let me digress for a moment, I want to ask a question. If the individual stock investor is fleeing the market, where has all of the buying come from? Could it be…government market manipulation? (On a side note…..the Church Lady from Saturday Night Live pops in my head when I think about that question of where the buying comes from; I can hear her say “Is it Satan?” I am dating myself. This was a skit from the '90s)

Once again, as tempted as I am to go there, I will go back to the point at hand.

I don’t think that it has anything at all to do with the stock market. I think that the individual investor has lost faith in the ideal that the financial services industry has preached from the pulpit of prosperity for decades. If you are a long-term investor, you buy and hold regardless of what is going on and you will be just fine.

So, why should Wall Street be so shocked at this lack of confidence? They preach this ideal as an absolute truth. The problem is that it is somewhat of a lie and investors are starting to figure out the game.

The reality is that this long-term investor belief works sometimes, but other times it explodes in the face of the investor. There is only one absolute truth when it comes to investing: THERE ARE NO ABSOLUTE TRUTHS.

More to come tomorrow…

With summer around the corner, Hollywood is about to roll out a slew of sequels, blockbusters and indie films sure to satisfy most people's craving for easy entertainment. Before making your summer selections, however, you should consider how best to spend your movie money.

According to TIME Moneyland, ticket prices are expected to increase this year thanks to lackluster sales in 2011 -- and that's not including the exorbitant cost of concessions. Don't let the inflated cost of the cinema deflate your family's desire to catch the season's best flicks on the big screen.

Follow these 11 tips to avoid blowing your movie budget.

1. Join AAA
The automobile club offers $8 tickets to Regal, United Artists and Edwards movie theaters. The catch is that you have to go to one of their offices to buy them.

2. Buy Movie Packs
This is the way to go for families. You can buy a four-pack of tickets from Costco, good for a variety of theatres, for just $34.99 and a 10-pack for $82.99. There's no expiration date and you can use the tickets seven days a week. BulkTix.com also saves you an average of $2 to $3 off a ticket's face value for seven different chains.

3. Attend Second-Run Theatres
There are several chains that show movies a bit past their prime. If you can wait to see the latest iteration of a Marvel comic, you'll pay anywhere from $3 to $6 for the same movie.

4. Ask for Senior Rates
If you're 60 or over, you'll get a discount from select locations of AMC Theatres. And Cinemark offers Seniors Day every Monday at some locations for seniors 62 and older. Ultimately, it helps to ask the cashier or one of the theatre managers about available discounts for seniors. Just be prepared to show your ID.

5. Skip the Concession Stand
Eat before you head out to the movies so you won't be tempted by the many treats on offer. Granted this is how theaters make their money, but it's also how you double the cost of your ticket.

6. Use Discount Gift Cards
Save 10 to 30 percent by purchasing discount movie theater gift cards from such sites as GiftCardGranny. In addition to saving instantly on ticket prices, you can cut the cost of concessions if the smell of popcorn is too tempting to overcome.

7. Swipe Your Plastic
Credit card companies and banks have increased their reward perks over the last few years and some of those include free passes to the theater. Visa Signature offers their credit card holders two-for-one movie tickets via Fandango on Fridays. Deutsche Bank Debit Card users can get one free pass for every one ticket purchased through BookMyShow.com. Ask your credit card or bank about such reward perks and take advantage of the discount.

8. Be Loyal
Kerasotes Theaters has the FiveBuckClub, which sends weekly emails with a list of movies members can see for $5. AMC Theatres offers points toward discounts, concession upgrades and more if you join their Stubs Rewards Program. Check with your local theatres to see if they provide similar deals for loyal customers.

9. Daily Deal It
Though daily deals for restaurants and spa services overwhelm your inbox, you have good reason to search through the clutter. Sites like Groupon and LivingSocial have featured movie theater savings of up to 50 percent, and will likely offer similar promotions this summer. The vouchers typically expire within a couple months so make note of the date and use them up before then.

10. Early-Bird Deals
Matinees can save you anywhere from 30 to 50 percent off prime-time ticket prices, leaving more money in your wallet for warm summer evenings.

11. Say Something
Have you ever watched a movie where the sound system was off enough to drive you crazy? Perhaps you ended up surrounded by a swarm of teenagers who shouted at the screen throughout the film. Don't be afraid to ask for a voucher or your money back if you have a bad experience. You may be surprised how often theaters will accommodate a polite request.

Andrea Woroch is a nationally-recognized consumer and money-saving expert who helps consumers live on less without radically changing their lifestyles. From smart spending tips to personal finance advice, Andrea transforms everyday consumers into savvy shoppers. She has been featured among top news outlets such as Good Morning America, NBC's Today, MSNBC, New York Times, Kiplinger Personal Finance, CNNMoney and many more. You can follow her on Twitter for daily savings advice and tips.