Everyone has something that they’re looking forward to – whether you’re hoping to give your daughter the wedding of her dreams, you want to see the world after retirement or you just want to take a well-deserved vacation. But the reality is that most of these special times cost money and planning and saving for them is a necessary part to enjoying the rest of your life. However, the planning part can become easier if you are able to articulate your financial goals before you start investing. Being able to answer a couple basic questions about the reasons you’re investing will help you find both an investment firm and a fund that will meet your needs.

First of all, if you know what you’re saving for, you already have an idea of how much money you’ll need and when you’ll need it by. Most goals can be classified in either “short-term goals” (accomplish within a year or two), “medium-term goals” (which will reach fruition in three to five years) and “long-term goals” which are more than five years away.

Second of all, you’ll have to decide how you want to manage your money. This includes figuring out how much money you can use as your initial investment and how much, if any, you can continue to contribute to your goal on a monthly or annual basis. This is determining your principle and will help determine what kind of investment you need in order to reach your financial goal in time. Then figure out a financial strategy that works for you. Your financial strategy will be comprised of how comfortable you are with risks, the mix of assets you want to invest in and your investment preferences.

Lastly, decide if you want to manage your money yourself or if you’d like to pay someone to manage your money for you. This is the difference between checking your investments everyday or having someone else looking at how your stocks are doing and making decisions based upon the market in general.

For people who are looking to supplement or totally replace their current income through investments, a significant amount of planning and thought must be put into the process. Many people who are serious about investments have already made a financial plan – assessed their risk factors, determined their goals (including how much they need and when they need it by) and know how much you’re willing to invest as principal and throughout the lifetime of your investment. However, creating a second income through investments requires even more substantial planning which comes in the form of an investment objective.

First, if you want your investment income to completely replace your current income levels, you need to plan your investments with a rate of inflation calculated into the future income level so that you have the same amount of buying power when you’re living on your investment. Additionally, your current annual income, the estimated rate of income (lots of investment advisors use 3 percent annually to calculate these), initial contribution and annual contribution to determine what the necessary rate of return is to continue to live at your normal comfort level.

Obviously, your objective should be built with your specific situation in mind but if you start with an initial investment of half your current income and continue to invest 10 percent income over the next 15 years, you’ll have to earn a rate of return of about 17 percent.

For long-term investors who are hoping to create a second income from stocks, it’s unlikely that you’ll be able to earn a steady income if you’re looking to get rich overnight with an unknown company that suddenly becomes the next big thing. Instead, serious long-term investors typically choose only solid blue-chip stocks. These stocks don’t rise as fast in a bull market as faster-growing companies but they also usually don’t lose as much as fast during a bear market. Long-term covered calls on those stocks can maximize any dividends and provide an extra income source.