Financial planning refers to your comprehensive financial map, the map guiding your path to the achievement of future financial goals. Financial goals are not set in stone; they often vary from person to person, with age and circumstances being large influencing factors.
Our experts will help you navigate the building blocks of financial planning – starting with the importance of having solid foundations. The overarching goal is to ensure you are financially prepared for all events in life; be it a medical emergency, your child’s education, your own retirement or unforeseen health problems.
There is a common misconception that financial planning is all about investment, however this isn’t true, investments are only one part of the financial planning portfolio. To ensure your solid financial foundations the first step has to be comprehensive contingency planning.
What is contingency planning and why do I need it?
Contingency planning looks in detail at your ability to respond effectively to a significant future event or situation, which may or may not happen. Your contingency plan is devised for an outcome which is removed from your ideal plan. This could be unexpected unemployment, a large debt needing payment, or a sustained increase in your cost of living. It is advisable to have enough money saved to cover three months of expenses should the unexpected happen. Once you have managed your contingency planning you can look at the next step, insurance planning.
What are the consequences of not having contingency plan?
If you were to lose your job suddenly and you had no money behind you there is usually one response, panic. Well actually two, stress and panic. Consequences can vary from person to person but could include, cashing in investments – often at the worst time when markets are down – defaulting on insurance and pension premiums, or even your mortgage.
Why do we have insurance – what is the impact financially?
The level of insurance which is advisable will depend largely on your personal circumstances. We can discuss repayment of your debts, what would happen to your home if you were unable to keep up repayments on your mortgage, what cover – if any – is supplied via your employer. We can sit down with you and discuss the areas which are important to you; there are numerous options and choices dependent on budgets and requirements.
How do you know you are adequately covered?
Is your health insurance enough? What about retirement or emergency funds? These are all questions we are regularly asked. The most common forms of insurance we are asked about are life insurance and health insurance. One of our experts can sit with you and work out your exact requirements; we can then find the most suitable products to meet your needs.
Just like a plant which relies on a strong root system to grow and mature, the lynchpins of financial planning have to be secured before you can move onto the next three levels. It is these later stages where you experience the benefits of that strong groundwork.
Why invest? Should I not be saving?
Saving has its place, but even the top interest rates don’t offer the same growth potential that investing does. Of course it depends on your investment objectives, nobody ‘needs’ to invest but it can help to provide an improved standard of living and better financial security.
How do I choose investments which are right for me?
Investment planning is the method of matching your financial goals and objectives with your financial resources. A thorough investment plan takes into account your personal circumstances, objectives and risk tolerance; choosing the right types of investments to fit your needs, personality, and goals.
By taking into account your risk tolerance, diversification and asset allocation, we can design an investment plan to provide clarity about where – and how much – to invest in order to maximize your returns. Having an investment plan will provide you with a sound strategy to follow and stick with; even when you see your investments fluctuate during a time of market volatility.
Why save for retirement? What are the consequences of not saving?
Retirement planning – in a financial context – refers to the allocation of savings or revenue for retirement. The goal of retirement planning is to achieve financial independence. The aim is to have enough to comfortably live on once you leave work. How much is ‘enough’ depends largely on what you want to do when you retire and when you want to retire. If you don’t save enough you could find yourself working far later in life than you would like.
Our experts will work with you to analyse not only assets and income, but also future expenses, liabilities and life expectancy.
When should I start to plan for my retirement?
Although planning for your retirement is ideally a life-long process. You can start at any time, but it works best if you factor it into your financial planning from the beginning. With increasing life expectancy as well as a growing cost of living, it is best to start retirement planning from the very start of your career. The investment in a good pension will reap rewards – and save you money – in later years.
What is estate planning?
Estate planning is the process of anticipating and arranging – during a person’s life – for the management of that person’s estate upon their death.
Estate planning involves passing on wealth to the people that matter most to you, in the most effective way. Individuals start estate planning for numerous reasons – some may want to reduce an Inheritance Tax bill, others want to see know that their assets will be enjoyed by future generations.
I’m not sure it’s a good fit for me?
Thorough estate planning will make sure that your family is provided for and not left to face financial ruin if the unthinkable should happen. But no planning doesn’t mean that your children won’t inherit anything, but it could mean they inherit far less.
Whether you have a financial plan in place and would like advice to add to it, or you are starting from scratch, please get in touch today to discover how the Generation Wealth Management team can help you.