The Five Pillars of Wealth!

Transformation of the 5 Pillars of Wealth on Prezi

What are your financial objectives?

A key to successful financial planning is to identify your personal objectives, so that you are better placed to achieve them. The following objectives are some which my clients are aspired to achieve.
Which apply in your own case?

• INCREASE my net spendable income
• IMPROVE my quality of life
• SAVE tax (including income tax, capital gains tax and inheritance tax)
• INCREASE the return on my investments
• SAVE money by using it effectively
• INCREASE my expected income in retirement
• GAIN peace of mind by feeling financially comfortable
• REDUCE paperwork
• IMPROVE my insight into present and future values of my pension schemes
• INCREASE my financial security
• REDUCE time spent worrying about my financial affairs
• ACHIEVE financial independence
• IMPROVE my business performance
• SAFEGUARD my family and dependents
• IMPROVE the organisation of my financial affairs
• INCREASE my financial awareness
• REDUCE personal, business and investment risks
• INCREASE the net amounts I give to charity

Any interesting financial objectives to share?

At which financial stage are you? And what's your strategies?

There are three basic financial periods that anyone could go through during their lifetime. They are the foundation, accumulation and distribution years. So it's important to have a sound financial plan to met their objectives in each period.

In the foundation years are the young and single, the young married and the young family. Generally, they need to have sufficient funds for emergency. Most will have a regular contribution saving program or start up an investment program by dollar cost averaging approach. It's always a challenge to live within their means because lack of accumulated savings and source of income flow. Obtaining life and medical insurance is always an added advantage because of relatively cheaper premium and their good health status.

Those who are married with kids and heading toward their retirement are in their accumulation period.The main objective is to maxmimise any savings dollars for their children education and retirement funds. To enhance their savings dollars by saving more and employ tax-saving or tax-exempted financial instruments. Proper risk management program like their life and medical insurance need to be constantly review to ensure "no shock" to their financial well-being.

The distribution years cover the period from the beginning of retirement to the time one reached their mortality. Advanced medical can last them for a long time. Standard of living is one major concern to ensure the accumulated fund is available to maintain purchasing power of that dollar. Coming to this stage, this group of people would have some health issues, so it's better to ensure all medical insurances have already put in place, especially the medical insurance and the long term care insurance. Considering what assets to pass on to who is also another important planning goals.

The Financial Strategy for....
Foundation Years
Because they have time, long enough to gain investment return to ride on the power of compounding. Next, because of time, they can afford to take risk to ride on the market and economy cycle. The strategy is to pursue a diversified investment portfolio with en emphasis on growth, and taking on riskier investments which generally yielded higher returns.

Accumulation years
The strategy is to continue with equity-dominated portfolio to optimize it's potential growth, while gradually shifting to income investments where equity funds are slowly replaced by bond or bond funds. It is also advantageous to maximize tax-deferred plan like SRS and tax-exempt investment instruments.

Distribution years
At this stage, the emphasis is to protect the accumulated assets, to reduce overall debt and to minimize tax. Since the planning horizon is short, the strategy is to shift a large portion of assets from equity to more conservative fixed-income. To balance between growth and income, annuities, bond funds and income funds could be invested. There is still the need to keep growth-type of investments as it can be used to battle against inflation.

Be S.M.A.R.T. in setting your financial goals

It is not good enough to know what your financial goals are.

Financial goals need to be "S.M.A.R.T."!

Set it by clearly defined what you really want to achieve it by being Specific.
It is wise to convert all your financial goals to "dollar and cents" for it to be tangible and Measurable so that you aware of how much you can work on it. Of course, the goals you set need to be Achievable within your financial means and desires. More often than not, we tend to set high goals for ourselves. However, I feel it's always good to set a Realistic goal; something you are capable of achieving it, something that you will be going to be proud of. A goal without having a Time frame is like living without urgency. How much time you need to arrive your financial destination will determine the quality of lifestlye you get to enjoy your fruits of labour.

To make sure you arrived your financial destination safely, placing appropriate yardstick along your financial journey is great importance to ensure that you are always on track.

With proper goal setting, you can achieve your goal SMARTly!

Financial well being for everyone

Financial Well-being for Everyone

Throughout our life, we have to make many financial decisions, such as:

• I want to have my own property
• I hope to upgrade to a bigger flat or apartment in 5 years…
• I want to buy a family car…
• I want to take my family on a holiday every year…
• I wish to provide my kids with an overseas university education…

However, we often make financial decisions in a haphazard manner. We tend to have no overall direction or lose the determination to enforce our decisions. Eventually, we do not achieve our intended goals or take a longer time to achieve them. And because we are so caught up with our immediate financial concerns during the most productive period of our lives, we fail to accumulate a sizeable nest egg for a comfortable lifestyle when we retire.

What is Financial Planning?

Financial Planning is the process of meeting your life goals through the proper management of your finances. It is a process that consists of specific steps that help you ascertain your financial condition objectively. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan how you can meet your current situation and future plans. Eventually, financial planning should provide direction and meaning to all your financial decisions.

By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can therefore adapt more easily to life changes and feel more secure that your goals are on track.

Take Charge and Plan Early

With financial planning, achieving your short-term ad long-term financial goals will become possible. Of course, the success of your financial plan depends on how realistic your goals are, how early you start, how much time you have to achieve those goals and how conscientious you are in following the plan.

How to make Financial Planning work for you

Financial planning will work well to help you achieve your desired goals, if you keep in mind some basic principles:

• Set measurable financial goals
• Understand the effects of each financial decision
• Re-evaluate your financial situation periodically
• Start planning as soon as you can
• Be realistic in your expectations
• Realise that you are in charge
• Know what to expect from a qualified financial planner
  

Some Common Mistakes with regard to Financial Planning
(Source: Certified Financial Planner Board of Standards)

• Do not have measurable financial goals.
• Make financial decisions without understanding their effects on other financial issues.
• Neglect to re-evaluate their plan periodically.
• Look for a quick financial fix instead of a long-term strategy.
• Expect unrealistic returns on investments.
• Think that financial planning is only necessary when they get older.
• Think that financial planning is only for the wealthy.
• Confuse financial planning is primarily tax planning.
• Wait until a money crisis occurs to begin financial planning.
• Think that using a financial planner means losing control.

Who Can Help?

As the years go by and our plan grows in complexity, we may well be calling upon a whole series of experts to help us. Included in this group may be an accountant, lawyer, a trust and investment officer of a bank, stockbroker and real estate expert. However, for most of us, the first person who can help us is a professional insurance adviser who specialises in Financial Need Analysis (FNA).
Such a person can help us to take the four steps necessary to achieve financial success:

1. Set financial goals
2. Prioritise them
3. Initiate a plan of action
4. Review and update the plan regularly

Last but not least...

There you have it - the basic of Financial Planning. Financial planning needs your investment of time in undergoing all those steps mentioned above. It is part and parcel of developing an effective plan for you to achieve your financial goals may be.
Basically, a sound financial plan is able to handle the following 3 events like:

1. We might live too long;
   
2. We might contract a serious illness or prolong injury;
   
3. Or we die too soon.
   

So start planning now to avoid any disappointment because nobody has planed to fail, but most has failed to plan.

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