moo

Your Financial Plan Has A Gap

Published by Terence Tobin on

Your Financial Plan Has A Gap

Check your financial plan, are you guilty of this?

Don't Fall in Love with Your Shares

Have you spent hours, days and even weeks doing research on a company?  You are going to buy their shares and have done all your home work. Well Done!

The company doesn’t really care if you do or don’t buy it’s stocks.  The company doesn’t even know who you are.  Don’t be sad, that is how investing is.

So if the company doesn’t love you, don’t love it back.  When it doesn’t behave or doesn’t go to plan (as you have a plan, right?), dump it! 

Top tip: if you work for a company that is listed on an exchange, don’t buy too much of it’s shares either.  If things don’t go well for the company, your investment tanks too.  

Know your Numbers

I don’t mean your phone number, bank account number or PIN number.  They are important but there are more important ones too.

When do you want to pay off your bond?

How much do you need to put your kids through school and varsity?

What is the effect of inflation on your retirement plan?

There are so many more numbers to know, have you figured them all out?  Need help?

Protection Against Emergencies

So the poo poo has hit the fan and you need money, NOW!  What do you do?

Some will dip into their bonds, some will use their overdrafts and others will take on debt – all of this makes me want to cry.

Please have a specific fund, set aside for emergencies.  A minimum of one months living expenses should be in this fund and this should be an immediate goal.  Get this up to 3 months and I will sleep better at night, so will you.

Make sure you have insurance coverage too.  Yes yes, it sucks to pay so much money to the big nasty insurance companies, but when the time comes you will get paid out far more then you paid them.

Think of income replacement cover, retrenchment cover, illness, injury and disability cover.  Life cover is to ensure your loved ones can continue living, if you are no longer here.

Estate Plan and Will

Death and taxes are the only two certainties.  When you die, it is expensive and even more expensive without a valid will and estate plan.

Having this drafted correctly, reviewed annually and adjusted where necessary will provide both you and your loved ones peace of mind.

Winding up an estate is no easy task and it is one you should not leave your grieving family to take care of.  Don’t do it.

When last did you READ your will?  Can’t find it?  Then neither will your family and the law of Intestate Succession will apply – which means government decides who gets what and when.

Tax Free Investments

Almost everyone should have a tax free investment (otherwise known as a Tax Free Savings Account).  These little beauties provide you tax free growth on your investments.

Who loves paying tax?  No one! So now you can invest without paying tax on any interest earned, capital growth or local dividends.

Make sure you find a low cost solution, high returns, flexibility and understand the various limits.

Once you take money out, which affects your life time limit (negatively), you can never replace it.

These investments are awesome LONG term solutions – think 20 years plus.

Find the right partner

So who do you get to help you when you not sure what to do.  That is so important. 

Ask them lots of questions.  Why are they a financial planner?  Who pays them?  What will they do when the poo poo hits the fan and you need help?  Where do they invest their money and where is their insurance?

A partnership is about sharing, from both sides and being honest about things.  Sometimes you will be told things you don’t want to hear but need to hear.  A partnership based on trust, should last decades.  This is what I want to build with my clients.


0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *