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Posted: 27 months ago

7 STEPS TO FINANCIAL PLANNING - PART 1

One of the most popular things we review heading into a new financial year is our investments. Whether it's setting a savings goal, identifying new investment opportunities or simply taking the chance to review the performance of current assets, it's always a great time to lay down some financial planning objectives for the future.
The thing is, many people haven't. While retirement and financial planning is often a concern for many people, these fears do not necessarily translate into action. Starting your financial planning early is vital for building a successful property investment and, as we look to set goals, there's never been a better time to get started.

SET YOUR GOALS
The most important part of any plan is the preparation. Understanding the finances and assets you have available to you currently is vital, especially before you start setting long-term goals. For investors especially, knowing where you stand is important to ensure you can find the optimum investment to fit your strategy, needs and budget. When you're setting your goals it’s vital that your investment fits into your present and future plans: Before I can tell someone what the optimum investment is, we need to take a look at what they currently got and make sure that investment fits into their circumstances now and then what their objectives are in five or ten years time. The starting point is what do you have now, the second point is where do you want to get to and then my job is to bring the two together with a recommendation.

SET A BUDGET AND STICK TO IT
At this point in your planning, understanding your budget is vital. A trap that many investors fall into is having an inflated view of the income that their asset base can produce, especially once they stop bringing in a regular salary. This typically leads to setting unrealistic goals, which can bring challenges in the long-term. A more realistic way of working is to break down the amount of money you need and the lifestyle you want and then marry the two together. This leads to a much more realistic picture of what life could look like during retirement. Just remember to be flexible. Goals can change at a moment's notice and it's important that your entire financial plan is flexible enough to meet those changing objectives.

WHAT PART DOES RISK PLAY?
As always, any investment carries a degree of risk. It's important that you consider your risk profile, how risk averse you are and take steps to mitigate risk further down the line.
This can include speaking to industry professionals "such as an Cowries Prospecting" or just ensuring you have a diverse portfolio of assets. Property is particularly effective for building a diverse portfolio as you can mix up your property types and locations, ensuring you're not relying on one specific market.

THINK LONG TERM
As living costs increase, the prospect of working longer to build a comfortable retirement is much more likely. This is why many people turn to investments to support later life whether it's a pension, property, or stocks. When you're setting your financial goals, thinking long-term is just as important as the short-term. Any movements you make now can have an incredible impact on your pension pot for the future. Also consider that by building your financial planning and even investing now, there is more opportunity for building a solid, diverse portfolio that can deliver much more than relying solely on a pension.
Having additional investments can provide compound returns and deliver passive income over longer periods of time, freeing up capital to re-invest, supplement a pension pot or simply enjoy. This is where an "Off Plan" property investment can help. With the potential for building value over the long-term, plus the opportunity to deliver rental returns upon completion, Off Plan property is a natural fit for those that want to maximise the results of their investment over the long-term.

STAY ORGANIZED
Regardless of the size and scope of your objectives or investment portfolio, ensuring proper due diligence from the outset of any purchase is vital. Staying organised will ensure that you maintain a focus on your future objectives, which can be made easier by setting SMART goals, specific, measurable, achievable, realistic and timely. You'll want to set goals that fit all of the criteria above. By doing this, you'll naturally focus your efforts and increase the chances of being successful going forward.
During your financial planning and indeed the investment process you'll want to stay on top of your cash flow, your investment location (in the case of property) and general market trends. These can all affect an investment and organisation is vital for keeping each of these aspects in check.

Continues in Part 2 - 7 Steps to Financial Planning here: https://cowries.com.ng/BLOG_V.php?s=abfe6fced778b4ced505