All good investment strategies start with your Financial Plan – and here is why you need one!

By Sue Stewart: GDipBus (Personal Financial Planning), CFPCM
Financial Adviser – Investments.

Goal Setting: How do you know “when you are there” if you haven’t defined where you are going?  Your Financial Plan helps you define your short (1-2 years), medium (3-5 years) and long-term (5 years +) financial goals.  This may be saving for travel adventures, ongoing study, buying a first home, starting (or buying into) a business or retirement.  Whatever your goals are, a Financial Plan provides direction and motivation for your financial decisions.

Financial Awareness: Developing a Financial Plan makes you stop and assess your current financial situation thoroughly.  This includes evaluating your income, expenses, assets, liabilities, and insurance covers.  Understanding your financial standing increases awareness and empowers you to make informed decisions.

Debt Management: For many people, managing debt is a significant aspect of financial planning. A financial plan helps you develop a strategy for paying off high-interest debt systematically while avoiding accumulating new debt. This can help you to reduce interest expenses, and free up funds for saving and investing.

Investment Planning: A Financial Plan includes investment strategies tailored to your financial goals, timeframes, and risk tolerance.  By establishing a well-diversified investment portfolio aligned with your objectives, you can pursue long-term growth while managing risk effectively.

Risk Management: Financial planning involves assessing various risks that could impact your financial security, such as job loss, illness, disability, or unexpected expenses. Developing strategies to mitigate these risks may involve building an emergency fund, obtaining insurance coverage, and diversifying investments  to protect you from financial setbacks.

Retirement Planning: Planning for retirement is a crucial component of a financial plan. Estimating your retirement income needs, assessing available assets (e.g., KiwiSaver, property, businesses, and investments) and implementing bespoke strategies are key.

Tax Optimisation: Family trusts will be taxed at 39% from 1 April 2024.  Financial planning involves optimizing your tax situation by taking advantage of available deductions, credits, and tax-advantaged investment accounts.

Estate Planning: Seeking legal advice on how to protect your family and assets should include ensuring you have an up to date will in place, as well as necessary Power of Attorneys and Enduring Powers of Attorneys as fits your stage in life. This needs to be done NOW to ensure your assets are distributed according to your wishes and saves your family from many hassles should the unthinkable happen. 

Peace of Mind and Financial Security: Ultimately the purpose of creating a Financial Plan is to achieve peace of mind and financial security. Feedback from our clients has been that they feel greatly comforted by having someone to share their journey with and to assist them with substantial financial decisions.