Planning or Dreaming?

1) The first tenet of Valuation-Informed Indexing is that planning is key to effective money management.

Planning for what? How can you plan for something if you don’t have a goal? You need to dream.

Only after you dream, can you start to plan. Your dream starts out vague. You begin to fill in details. Your dream begins to take shape. You add more details. You identify little things that will take you toward your dream. You continue. Your dream crystallizes. Finally, you have something. You have your dream. Finally, you can make it happen.

Now you can begin to plan.

System Engineers look at large projects at all levels. The top level, which identifies the product (actually, the desired capabilities), is critical. A system engineer breaks the large project into a series of smaller and smaller projects until he has a firm understanding of each.

All along the way, he must ensure feasibility. Sometimes, this involves demonstrating feasibility at the lowest possible level. Sometimes, he will start in the middle and work his way both up and down.

Throughout a project, a system engineer steps through an entire process again and again. Identify the requirements, identify feasible solutions, make trade-offs, allocate requirements, refine solutions, revisit requirements, reallocate requirements, conduct feasibility studies, dig down deeper and deeper. Plan continually. Always place the emphasis on requirements. [Design to meet ALL of the requirements, not just some. Throughout the entire lifecycle.] Test every increment thoroughly.

But you can’t plan if you don’t have a goal. You need an objective. You need a dream.

Early retirement simply for the sake of idleness is a lousy goal. At least, in my opinion, it is a lousy goal.

Financial independence to shield yourself from employment related shocks is good. Financial independence to open up opportunities is better. Financial independence that allows you to pursue a dream is best.

Once you have a dream, it is time to build a plan. The first thing that you need for planning is a baseline. Always insist on a baseline.

Always Insist on a Baseline
The Rule of 25

Which is the key? The plan or the dream? A little of both?

Have fun.

John Walter Russell
November 12, 2005