November 1, 2023
As with most other successes in life, building wealth and achieving your long-term financial goals rarely just happens.
Most people are used to the idea that setting and remaining focussed on goals and objectives in business, career or personal life is the way to achieve them. Financial security is no different.
Whatever your goals, when you have a plan, you are more likely to take the necessary steps to reach them.
Creating a financial plan, which is done most effectively together with your IFA, doesn’t just help you to gain a clearer picture of where you want to be in your financial future. It’s also an important tool for helping you to understand your attitude towards your finances, your tolerance of risk and your budgetary needs.
Of equal importance, but often overlooked, is the ‘why’? What are YOUR reasons for building wealth? That might sound like an obvious question, but when we ask our clients that question, the answers are as individual as they are.
You might be aiming towards a specific retirement plan – embarking on a new adventure, or following a lifelong ambition, or simply ensuring a comfortable lifestyle. Or you might be planning to fund a new business, support education or a house purchase for your children or grandchildren, or to leave some other legacy. Whatever it is (and there’s no right or wrong answer), being clear about why you are committing to a plan is an important step.
So what are the other common traits of successful wealth builders?
The earlier you begin to put your money into investments or pension plans, the longer your money has to benefit from the power of compound returns, where your accumulating savings generate even more earnings over time.
Making consistent contributions to your plan – whatever form it takes – throughout the year is vital. By putting in a fixed amount regularly, you not only get into the habit of treating it as an essential financial activity, just like paying bills, but also have the advantage of being able to buy more when prices are low, potentially reducing the cost of your investment and being in a position to reap the rewards when prices are high.
Knowing how much you need to save to achieve your financial goals in the long-term helps you to understand how much you need to be saving now. Regularly reviewing your plan and your progress with your IFA helps you to be confident that you are on track, or to make adjustments if you need to.
Diversification is an important part of managing risk and being in a position to take advantage of a wider range of opportunities. This is another area where an IFA’s experience and perspective are helpful. Their understanding of different markets, and the varying levels of risk associated with different types of investment will help you to avoid investment mistakes.
Your personal tax-free allowances and the amount of tax relief you’re entitled to on pension contributions or certain other types of investment can change. It’s important to keep up-to-date so that you can make sure you’re getting the most benefit from them – reducing your tax liability and potentially increasing the value of your savings and investments. It can be a complicated area though, depending on the complexity of your finances, so the advice of an IFA can help you to make the most of these opportunities.
Having a well-structured financial plan, and reviewing it regularly will also help you to avoid making hasty decisions based on short-term market fluctuations, and to avoid the temptation of ‘too good to be true’ opportunities. Your IFA will help you to maintain a long-term perspective.
At Talis IFA, we specialise in helping our clients to achieve their life goals through financial planning. From building your financial strategy, to advising you on the pensions, investments and savings options that are best suited to your needs, to protecting your finances against the unexpected, we take a life-first, money-second approach, and are with you for the long-term.
Our experienced IFAs look beyond the numbers, building a relationship with you that enables them to understand what’s important to you, and to guide you through making the decisions that will set you on the path to a secure financial future.
This article does not constitute tax or legal advice and should not be relied upon as such.
The value of your investments can go down as well as up and you may get back less than you invested.
The tax treatment is dependent on individual circumstances and may be subject to change in future. For guidance, seek professional advice.
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