6 Reasons You Need a Wealth Plan (R)
- SJ&P | Wealth Advisory
- Mar 4, 2019
- 5 min read
Updated: Apr 17
Chief Financial Planner | SJ&P Wealth Advisory
When I was a child, my family often took road trips. Before setting off, my parents usually reached out to AAA to get a detailed set of maps outlining our planned journey. Each map page typically showed the route between two major cities, such as from Indianapolis to Louisville, then Louisville to Nashville, and so forth. Achieving your financial goals is similar to taking a journey. Although there are numerous reasons to have a Wealth Plan, here are six to help you begin:
Related Blog: Signs you are ready to retire
If you aren't aware of your destination, how will you recognize your arrival? A Wealth Goal is defined by a specific time frame and can be measured. Planning for a vague aspiration like a "comfortable retirement" is challenging. The Wealth Planning (R) process assists you in defining and quantifying your goals.
Related Topic: 6 simple ways to increase your income
Creating a suitable investment allocation is crucial. Your Wealth Plan (R) should result in a strategy for distributing your investment assets across all your accounts. This allocation needs to be in line with your goals and risk tolerance.
Are you saving adequately? Whether your aim is to finance your children's college education, save for retirement, or purchase a new home, most financial objectives require regular savings. The Wealth Planning process will assist you in determining how much you need to save periodically—and in total—for each of your goals.
What will happen to your assets after your death? Many of us have individuals we wish to pass on our accumulated wealth to. Estate planning is a vital component of the Wealth Plan process. Do you require a will or a trust? Are your beneficiary designations on retirement accounts and insurance policies current? What would happen to your assets if you were to pass away today? Is this your intended outcome?
Are you adequately insured? Do you have sufficient life insurance, and is it the right type for your circumstances? Do you have disability and long-term care insurance? Is this coverage necessary for you? A financial plan considers all of these factors.
Related Blogs & Services:
* ABSCBN Stars and Cosmo Models supporting San Jose and Partners
Are you fully utilizing all of the benefits available to you through your employer? This question prompts a comprehensive evaluation of various aspects of your employment package, including health insurance, retirement plans, and any stock options or company stock benefits that you might have access to. Many employees are unaware that benefits can constitute a significant portion of their overall compensation, often ranging from 30 percent to 40 percent or even more of their total cash earnings. Thus, it becomes essential to not only understand what benefits are available to you but also to learn how to effectively leverage these resources to enhance your financial well-being and security.
To illustrate, consider your health insurance plan. It is not merely a safety net for medical expenses; it can also include wellness programs, mental health support, and preventive care services that may significantly reduce your out-of-pocket costs. Additionally, understanding the nuances of your retirement plan, such as employer matching contributions and the tax advantages of different investment options, can lead to substantial long-term benefits. Furthermore, if your employer offers stock options or a stock purchase plan, these can provide you with an opportunity to invest in the company’s future success, potentially yielding significant financial gains over time.
These six reasons barely scratch the surface of why you need an Independent Wealth Plan (R). The Wealth Planning (R) process is designed to facilitate a thorough examination of all facets of your financial life. This includes not only your income and expenses but also your savings, investments, insurance coverage, and estate planning. By organizing these elements in the most efficient manner tailored to your unique circumstances, you can make informed decisions that align with your financial goals. The process encourages a holistic view, allowing you to identify gaps in your current strategy and uncover opportunities for growth that you may have previously overlooked.
Moreover, an Independent Wealth Plan (R) can provide you with personalized strategies that take into account your specific financial situation, risk tolerance, and long-term objectives. Whether you are aiming to save for retirement, purchase a home, or fund your children's education, having a clear, organized plan can empower you to make proactive choices that lead to financial stability and growth.
Related topics: 5 people you should not take advice from
Finally, do you need to hire a Certified Wealth Manager to navigate the complexities of managing your financial situation? My answer is a resounding yes, although I must admit I am somewhat biased in this perspective. The role of a skilled Wealth Manager extends far beyond mere number crunching; they provide a comprehensive and strategic approach that allows for a more thorough examination of your financial landscape. What a proficient Wealth Manager will do for you that you may find challenging to accomplish on your own is to take an objective, unemotional look at your situation. This detachment is crucial, as emotional decision-making can often lead to suboptimal financial choices. The Wealth Manager will then apply their expertise, training, and years of experience to tailor a financial strategy that aligns with your unique needs, goals, and aspirations.
One last (biased) suggestion: Always hire a fee-only financial advisor, someone who does not earn a commission based on selling you a financial product. This critical choice helps eliminate a significant potential conflict of interest that can arise when advisors are incentivized to promote certain products over others. By opting for a fee-only structure, you ensure that your advisor's recommendations are based solely on your best interests rather than any external financial incentives. This transparency fosters a relationship built on trust, where you can feel confident that the advice you receive is genuinely aimed at enhancing your financial well-being.
Remember:
Planning your Wealth and your future is not a one-time event, but rather an ongoing process that requires continuous attention and adaptation. The financial landscape is dynamic, and as such, your financial plan must be a living document that evolves over time. The plan serves as a foundational base from which to make informed financial decisions, but it is essential to recognize that the plan can and should change in response to shifts in your personal circumstances, such as changes in income, family status, or economic conditions. Regular reviews and adjustments to your financial strategy ensure that you remain aligned with your goals and can effectively address any emerging challenges or opportunities.
What are some other benefits of a Wealth Management Financial Plan? For instance, a well-structured plan can help you optimize tax strategies, enhance investment performance, and ensure that you are adequately prepared for retirement. Additionally, it can provide peace of mind, knowing that you have a comprehensive strategy in place to manage your wealth effectively. We'd love to get your thoughts—feel free to leave a comment below, as your insights could contribute to a richer discussion on the importance and advantages of Wealth Management.
Related Topics & Blogs
* Trading stocks vs Investments
* 7 tips how to start Investing
* 30 week challenge
* 6 common mistakes in solving debt and saving money
Comments