DEVELOPING A LONG- TERM FINANCIAL PLAN
As the year begins to wind down to an end, this period marks a time when many of us are beginning to make our end- of year plans for the festive season. This is the season that requires well deserved rest and quality time spent with loved ones. While a joyous and celebratory period, it is also an opportune moment to reflect on the year past and what we would like to build for ourselves and our loved ones in the oncoming year. Therefore, this is one of the best times of the year to begin building or revising your longterm financial plan.
The first step of this important process is to define what a financial plan is and why it is a useful tool regardless of where you are in your financial journey. Financial planning is an ongoing process aimed at supporting your current needs while also helping you build a nest egg for your long- term goals, such as retirement or further education. A longterm financial plan therefore requires a strategic outline for reaching specific goals within various aspects of your life. Usually, the plan includes a document listing all the long- term goals alongside a breakdown of steps to achieve those goals. It seeks to answer questions such as what goals are you trying to achieve in the oncoming year, how will they be financed and what steps do you need to take to achieve them? Many of us, however, may neglect using this tool, and by doing so run the risk of incurring similar financial setbacks as we have previously experienced.
Designing a financial plan allows you to make the most of your assets, helps ensure you meet your future goals and gives you the confidence to weather any bumps along the way. Having a long- term plan inclusive of risk cover such as life insurance is vital to take control of the oncoming years ahead. As life is often unpredictable, we need to account for various unforeseen circumstances such as death or disability. In all decisions taken towards your financial future, it is important to ask yourself, Di Salela Mang? This questions are you going to ensure that a legacy is left behind to ensure that your loved ones are taken care of.
Di Salela Mang asks how do we ensure that our financial obligations and priorities such as our mortgages, children’s education fees and daily expenses continue to be accounted for when we may no longer be there to ensure this? It is important we do the best we can to safeguard our financial security to ensure that our loved ones remain financially stable if we are no longer here.
The topic of death or disability is one that many of us avoid speaking of with our families and loved ones, however it is one of the most important ones you can have within your lifetime. There are many reasons why life insurance is important, however, its main purpose is to ensure that your loved ones are secure in the event of your death. Life insurance is not only designed to take care of the costs of the funeral, but the ongoing costs of life itself. It is there to preserve, and perhaps even improve, the quality of life of the people you leave behind.
Most people remain skeptical about taking life cover, due to the misconception that it is only for the elite. However, once a person begins to explore their options, there are many policies and premium options that are affordable. While it should be a very detailed and introspective process, the below are a few starting points that can be used to develop this plan.
The topic of investing is one that is very relevant when creating a long- term financial plan. As is often discussed with the assistance of a Financial Advisor, when it comes to investing you need to think about risk. This not as scary as you might think. Risk is a spectrum, and you can decide between a low- risk or a high- risk investment, depending on various factors such as your age and financial obligations. It is important to involve a Financial Advisor when deciding to onboard investment products into your financial plan.
Low risk usually means something is a stable investment, and the amount you put in will either stay the same or yield guaranteed modest returns. This type of investment is usually for a short to medium- term goals.
High risk means that the amount you invest is more subject to external influences, however these may also yield the higher returns. It is important to remember that high- risk investments are suited towards your longer- term goals. The unsettled nature of these kinds of investments mean that it may not be appropriate for a goal that you need to obtain in the next few years. The Botswana Life investment and savings plans are designed with the client’s priorities and goals in mind. The Isago Multi- Fund Discretionary Savings Plan, in particular aims to help clients save for planned events such as paying for tertiary education or purchasing a home. On maturity the client can choose to take all the investment value or can re- invest the proceeds. Having a product such as this included into your long- term financial plan is one of the most effective ways to ensuring that you achieve your goals within your set timelines.
There are indeed many risks that come with opting out of having a financial plan. The benefits are worthwhile and may include the following steps to create an achievable and actionable goals. It is vital to involve your financial partner during this process as they will play a critical role, not only in advisory, but in ensuring that you continue to remain in line with this plan. Botswana Life is committed to remaining a longterm partner for Batswana through all stages of life to ensure a stable foundation for financial stability.