It’s not uncommon to reach your 50s without any coherent financial plan. Many of us have a transaction-only relationship with the financial services industry, picking up products as we go through life: a pension, life assurance, income protection…
This is not financial planning.
Neither is financial planning about picking an amount of money out of thin air and trying to make sure it’s in the bank. It starts with figuring out what kind of life you really want. Do you want to retire early? Sell your business? Downsize? Move? Start a new career or venture? Help the kids get on the property ladder? All of the above?
If you’re not 100% sure what you really want, a good financial advisor knows all the right questions to ask. A good financial advisor is someone who takes the time to get to know you and your specific circumstances. He or she can help you plan for things that are likely to happen and make sure you have the arrangements in place to achieve the things you want to happen.
Life is constantly changing and financial plans change too. Financial planning is about the reassurance of knowing you have things under control rather than boxing yourself into a rigid regime.
Have you considered…?
A financial review
In a financial review, your advisor will help identify any gaps there might be in your financial life. If you haven’t already identified your goals, your advisor can help you do that too. The next step is to see how far away you are from achieving those goals. Our advisors use cash-flow planning software to visually plot out your probable future income and outgoings so that you can identify gaps and surpluses.
Even though you have plans in place for retirement it is not uncommon to have low-level anxiety about whether or not you’re going to have enough money for however long you live. The first step is figuring out how much you’re likely to need. Your advisor will cover retirement funding as part of your financial review.
If you’re ten years or fewer away from retirement, go to our pre-retirement page to see how we can help you make the right decisions to maximise your wealth at this important time. If you’re about to retire, go to our retirement page to learn more about your options.
Do you have a business that you want to pass on to the next generation? Have you thought about how your estate will be divided up on your death? You may need to act now to make sure your loved ones are looked after and not burdened with onerous inheritance tax bills. If your net worth is high you may want to consider a section 72 whole-of-life insurance policy which protects the next generation from high inheritance tax bills.
Something to consider is the small gift exemption. Under current legislation you can gift up to €3,000 per annum to anyone without any tax obligations for you or the beneficiary. This can be a great mechanism for passing on your wealth to family members while you’re alive, which might be when they need it most.
It’s natural to want to ‘do something’ with your excess cash, especially with deposit rates so low, but what you do with the money should play into your overall financial plan. The terms and risk profiles of your investments should all feed into your short, medium and long-term goals.
Capacity for risk
This is an important concept when it comes to investment. With greater risk comes the potential for higher returns but you must be in a position to handle the consequences of a high-risk investment going south. How would it materially affect your standard of living? In a financial planning relationship, your advisor will be able to assess your capacity to take on high-risk investments. On the other hand, he or she may point out that you can afford to take on more risk than you currently are in your investment portfolio.
The big word when it comes to investments is diversification
You may not even realise that you’re over-exposed to a certain asset class such as property, for example. Your financial advisor will help you analyse your portfolio for this kind of risk and help you rebalance it. We can help you diversify your portfolio away from property and the volatility of the stock market with options such as renewable energy, fixed-income bonds and kick-out bonds.
If the idea of future-proofing your finances appeals to you, get in touch today. We’ll put you in touch with the advisor in your area, or have a look at our advisor profiles.
- WARNING: The value of your investment may go down as well as up.
- WARNING: Past performance is not a reliable guide to future performance.
Succession planning and inheritance tax | small gift exemption | funding retirement | capacity for risk