When life throws us curve balls, whether it91裸聊视频檚 an unexpected career change or international crises like COVID-19, we might question the importance of planning for our financial future.
But circumstances like these are exactly why a comprehensive financial plan is vital.
91裸聊视频淲hen markets are volatile, like we91裸聊视频檝e seen now, the financial plan becomes vitally important to help my clients determine whether they continue to be on track to achieve their goals,91裸聊视频� explains Kelowna-based financial advisor . 91裸聊视频淭he financial plan adds in a lot of contingencies for negative years in the market to ensure that a significant market collapse doesn91裸聊视频檛 mean that my clients now need to go back to work.
91裸聊视频淢y clients have been very calm and logical through this particular pandemic, because they rely on their financial plan and know that their retirement income and future are still safe,91裸聊视频� Wilson says. 91裸聊视频淭his provides them with important peace of mind. They know exactly where they stand.91裸聊视频�
Creating a plan that91裸聊视频檚 unique to you
By helping clients articulate their goals together they can to meet those goals, one that includes strategies for tax, estate and retirement income planning.
For business owners, that plan also includes succession planning to minimize taxation and to enhance retirement income.
91裸聊视频淓very client has a financial plan and this becomes the roadmap for all of our investment decisions,91裸聊视频� Wilson says.
All plans and subsequent strategies are based on the required rate of return needed to meet goals 91裸聊视频� the most important determinant when deciding on what to invest in and why.
Reducing fear by accommodating the unknown
Wilson believes the fear created for investors right now isn91裸聊视频檛 because markets or their investment portfolios are down. After all, most investors know the markets and their portfolios will recover.
91裸聊视频淲hat people truly fear is that they91裸聊视频檒l run out of money in their lifetimes. Ultimately, this is the reason people invest 91裸聊视频� to make sure they have enough to pay for their lifestyle for the rest of their lives. Term deposits normally won91裸聊视频檛 do this for people because inflation rises faster than the rates we receive on term deposits. (Term deposits and GICs are among the only asset classes that guarantee losses when factoring in the effects of inflation.)
However, many who are fearful of investing resort to this strategy because they don91裸聊视频檛 have a proper plan to help guide them through their financial lives. 91裸聊视频淭hey allow fear to dictate their investment decisions, which means they ultimately can set themselves up to the biggest risk 91裸聊视频� outliving their money,91裸聊视频� Wilson says.
The solution is creating a financial plan and investment strategy that will withstand all market conditions, will provide them with their required rate of return, and will ensure that they have enough to last them their entire life. Revisiting this plan, especially in markets we are seeing today, helps clients know that they91裸聊视频檙e on track and that their biggest risk of outliving their money is still not a concern.
91裸聊视频淓ach plan is based on that client91裸聊视频檚 unique and special circumstances. Every person will have different spending habits, risk tolerances and needs to provide an inheritance, not to mention tax brackets 91裸聊视频� and their plans reflect this,91裸聊视频� Wilson explains.
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Tanya Wilson is a financial advisor with Raymond James Ltd. Information provided is not a solicitation and although obtained from sources considered reliable, is not guaranteed. The view and opinions contained in the article are those of the author, not Raymond James Ltd. Raymond James Ltd. member of Canadian Investor Protection Fund.