Just about everybody wants to become financially secure and independent – so why do so few people get there? One thing is for certain: it very rarely ‘just happens’.
It starts with a vision and then a detailed plan, and a willingness to commit to that plan. Your total life plan is a financial roadmap that will provide you with clarity about your future journey. It should detail every aspect of your vision – your hopes, fears, dreams and goals.
It should also describe exactly how your future will look and help you to understand exactly where you are headed and when you are likely to arrive. Writing out your life plan is one of the best investments you’ll ever make.
Part of this process is to understand your ‘number’ – in other words, the amount of money you’ll ultimately need to ensure complete peace of mind in knowing your future lifestyle is secure and making sure you don’t run out of money before you run out of life.
By getting to know you and what you want to achieve, we’ll be able to provide you with a detailed action plan that is focused on you. By creating a total wealth solution for you we can get a clear understanding of your current lifestyle, your future and the life you want to live.
Initially, creating a financial life plan will help you to make the right financial choices and achieve the right balance between current responsibilities and future aspirations. All of this should enable you to achieve your desired lifestyle goals and objectives over time.
This is important to fund expenditures and meet liabilities for the next two to five years. Investments should be held in stable assets with low volatility, such as cash and/or a high quality bond ladder. Failure to plan adequately for your liquidity needs could mean you have to sell assets at discount prices.
Assessing your cash flow needs over the next two to five years, and setting aside funds to meet them, creates a buffer between cash needs and market returns, thus reducing the risk of being forced to sell assets with high return potential at the wrong time. This strategy generally involves low-volatility assets such as short-term fixed income and cash, as well as borrowing facilities.
This will enable you to meet your financial goals for the balance of your lifetime, and is characteristically well-diversified across asset classes with a growth orientation. The exact composition depends on your situation, goals, financial personality and values.
These assets are designed to satisfy lifetime needs. With short-term cash needs met by your liquidity strategy, these assets can be focused on long-term growth, with an asset allocation tailored to your risk appetite and the family’s aspirations.
These are assets in excess of what you need to meet your lifetime objectives. Your approach to your legacy strategy investment portfolio could be more aggressive and less liquid than those investments in your liquidity or longevity strategies, given the time horizon is much longer term.
This strategy is assigned to improve the lives of others, both within your family and in society. In many cases, this will include cash flows lasting beyond your lifetime, including philanthropic goals and assets earmarked for future generations.
Given the opportunity to focus over a very long investment time horizon, this strategy has the capacity to invest in asset classes that offer an illiquidity premium, such as private equity, or investment themes that seek to profit from long-term trends in society or technology.
Whatever your thoughts, to ensure you take account of the full range of available options, we would always recommend you consider obtaining professional financial advice.
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.
THE TAX BENEFITS RELATING TO ISA INVESTMENTS MAY NOT BE MAINTAINED. TAX RULES ARE COMPLICATED, SO YOU SHOULD ALWAYS OBTAIN PROFESSIONAL ADVICE.
A PENSION IS A LONG-TERM INVESTMENT.
THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.
PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.
This content is for your general information and use only, and is not intended to address your particular requirements. The content should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the content. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. All figures relate to the 2018/19 tax year, unless otherwise stated.