This article is focused on two audiences – those who have taken financial advice and it might be time for a review and those who are still thinking about it getting started.
Financial planning is, by its nature, forward-looking. What counts is where you are now and what you do in the coming months and years. That said; there’s good reason to pause and take a look over your shoulder to see how far you’ve come. Why? Because taking stock of what you have achieved so far can spur you on to even greater things in the future.
Aside from congratulating yourself for having taken professional advice and worked to a plan, pausing for a look at where you’ve come from also provides an opportunity to review your current circumstances. Even the best of plans need some tweaking to make sure they are optimised for the next few years.
Don’t have a financial plan? In that case, it’s well worth looking at what you may have missed out on, and decide to take action and do something positive about it.
Has compounding been working for you?
Much of our future financial security relies on regular savings coupled with the power of compound interest. For example, if you’d set up a savings plan[1] two years ago with an initial deposit of $10,000 plus weekly contributions of $100, and assuming an after-tax return of 6% per year, by now you will have earned $1,892 in interest.
Underwhelmed? If you’d had that same savings plan running for 10 years, the interest compounds to a more impressive $27,200; saving you a nice nest egg of $89,000. Keep going and the interest component will continue to accelerate.
Maybe you’ve done better than that, upping your savings as your income has increased. But if instead, you’re thinking about what might have been, remember that the sooner you start the sooner you’ll reap the rewards.
Are you protected?
A financial plan is about more than savings. Protecting what you have is critical to your family’s security.
Over the years have you enjoyed the peace of mind of knowing that your loved ones would have been financially secure if you had died or been unable to work? Now maybe the time to review personal life insurances. As children become independent and savings grow, you may find yourself paying for cover you don’t really need. Conversely, if your family is growing or you have taken on more debt, maybe your life insurance needs a boost.
Where to from here?
So how do you feel as you look back at the past five, ten, or twenty years? Can you pat yourself on the back, or do you feel like giving yourself a kick in the pants? Are you glad you took advice, or regret that you didn’t?
Whether it’s time for a review and a tweak or laying the foundation of a brand new plan, as a professional financial adviser we’re ideally placed to help you make the most of the coming years and decades.
[1] Not including any fees or charges. Based on ASIC Moneysmart website calculations.
The purpose of this website is to provide general information only and the contents of this website do not purport to provide personal financial advice. JourneyNest strongly recommends that investors consult a financial adviser prior to making any investment decision. The contents of this website does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided on this website is given in good faith and is believed to be accurate at the time of compilation.