At the beginning of a new year, many people take the time to sit down and review their financial goals. While it’s important to periodically check in with how your investments are performing, the best practice is to trust in your allocations. But that doesn’t mean you should never make any changes, nor does it mean you can’t find new investments to put your money into.
This does not constitute advice and advice should be sought in all instances before acting on it.
An integral part of building a personal lifestyle financial plan is to work out the amount of money you will need to ensure peace of mind when it comes to your future. Knowing your ‘number’ means you can plan your investments accordingly so you won’t run out of money during retirement. Making a detailed action plan can help you meet your goals by illuminating the right financial choices and balancing your current financial responsibilities with your future aspirations.
Know what you need in the short term
Understanding your liquidity needs will help you fund expenditures and meet liabilities for the short-term future (about two to five years). By this we mean being able to easily access cash if needed. You need to be able to access your investments when you need to but they should also be held in stable assets with low volatility, like cash, short-term fixed income, or a high-quality bond ladder.
If you don’t have a proper plan for your liquidity needs then you might need to tap into other areas with penalties for withdrawing your money early or you might end up selling your assets at discount prices just to get the money you need. If you set aside funds to meet possible immediate needs, it helps to create a buffer between your cash and your market return, reducing the risk of needing alternative options.
Look to the longer term
Along with having a liquidity strategy for short-term needs, your assets also need to be focused on long-term growth, with an asset allocation strategy tailored to your risk appetite and the family’s aspirations.
A successful plan is well-diversified and takes into consideration your current financial situation, future goals, financial personality, and values and will help you find the balance between short and long-term needs.
Future generations
Along with planning for liquidity needs and long-term goals, you should also think about what – if anything – you want to pass down to your family and loved ones. Your approach to your legacy strategy investment portfolio could be more aggressive as you have longer to accumulate wealth. You can try out new investments, different asset allocation mixes, whatever you and your adviser think might help you leave a healthy inheritance for future generations.
Trusted advisers
If you’re well-versed in investing, or if you have a professional partner to help you, it can bring you great returns. Working with a financial adviser that specialises in working with dental and medical professionals can support you throughout your journey and factor in your attitude to risk – and even could help you reach your goals faster than you ever imagined.
The advisers at Dental & Medical Financial Services provide guidance so you can navigate each step of the investment process, review your entire financial position at least annually, and recommend any changes in strategy as necessary. Get in touch with us today.
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