Managing Your Money

How financial planning is like sailing

Sailboat3.jpgWhen it comes to sailing, I’m as amateur as it gets. I learned on the Charles River and never graduated onto larger, more open waters. While navigating my small sailboat on the Charles one day, it occurred to me how much sailing and financial planning have in common. When sailing towards a distant destination like a dock, if you are off course, it often only takes a slight adjustment to the rudder to get you back on course. However, if you wait until you are too close to the dock, then a more dramatic and aggressive maneuver is necessary to correct the problem. In other words, a small shift now has a big impact on where you’ll end up. The same is often true for financial planning.

One of the first steps in creating any financial plan is to identify the goals you are trying to achieve. Common goals are retirement, college funding, purchasing a house, financial independence, or reducing estate taxes. With most goals, the more time you have to accomplish your goals the better. Take retirement for example. If you are twenty years away from when you want to retire, then it may only take a small change to put you on track to accomplish your goal. Maybe that change is increasing your 401(k) contributions by 5 percent annually. Maybe it’s reviewing your investments to make sure they are allocated in a way that matches not only your time horizon but also your personal tolerance for risk. Maybe it’s finally setting up a retirement plan for your small business. In all of these examples, the sooner the change is made, the less dramatic (and possibly less costly) the change may need to be.

In a sailboat, especially on a small river, it’s mostly easy to tell if you are off course. This is not always true for your financial goals. The horizon is not so clear. You need to account for things like growth rates, market movements, inflation, expenses, unexpected events, longevity, soaring tuition costs. The list goes on and on. Often you’ll need to seek out the help of a trained and experienced professional to first tell you if you are on track and if not, how to get there. Don’t be afraid to ask for this help if you suspect you need it because the sooner you make the corrections, the smaller they may need to be.

D. Abraham Ringer, CFP® is a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which this article is directed. For more information please consult

The information contained in this article is not a solicitation to purchase or sell investments. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. Morgan Stanley Financial Advisors do not provide tax or legal advice. The views expressed herein are those of the author, D. Abraham Ringer, and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S.

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