It’s time to take stock
DO A FULL PERSONAL FINANCE REVIEW AND SET A NEW GOAL Sound personal financial management covers all matters related to your financial life.
Many people think they have lots of time to save – for retirement for instance – and discover too late that they needed a few more income-earning years. Others think the stock markets aren’t doing well and it’s too risky to invest now.
Get organised around personal financial affairs. Take a good hard look at all accounts – current/cheque accounts; savings accounts; debt or loans; retirement and/or pension funds.
A full review is the best starting point to find the most suitable goal for a new year. If you have high debt (in relation to earnings) – getting rid of that should be a key focus. If you’ve ignored saving for retirement for a while, be mindful of the much longer life expectancy predicted and how this means much more funding is required to support a lifestyle once a regular income stops. There are many different options to select for investment such as: Cash in the bank in an interest-bearing account Investing in stock markets (directly in shares or via funds like unit trusts) Property Alternatives like physical coins, art or vintage cars Each investment has different characteristics, returns histories and, importantly, levels of risk. Understand what level of risk you can tolerate and review the options before deciding what’s best for your circumstances. Sound personal financial management isn’t only about paying off debt and investing and/or saving, but all the matters related to your financial life. It includes risk issues like: are your belongings and assets properly insured; is appropriate life cover or dread disease cover in place should unforeseen circumstances occur; is your will up to date with your current situation and does it express your wishes for your estate? Paying tax is a fact of life, but when investing there are ways to lessen the burden. There are tax benefits for investing in a re- tirement annuity. Selecting an investment vehicle like a fund of funds offers some protection against capital gains tax (CGT), as switches within the fund don’t attract CGT. Speak to a tax advisor who understands the tax rules and elements like allowances for offshore investment. Over time the stock markets of different regions and industries were, at times, by far the best performers in the global investment universe, only to pull back when some or other international crisis causes investors to lose confidence in that market or asset class.
Diversification ensures that an investor isn’t exposed to a single asset class, region, industry or investment option.
To make the most of your money have a plan and consult experts like qualified financial advisors, tax consultants and risk experts.