All financial plans are not the same. Your Nedbank financial planner will be able to create the ideal personal financial plan just for you - taking into consideration your particular circumstances and preferences as well as your vision for your financial future. To do so your financial planner may conduct one or more of the following when creating your plan.
Risk factors - in financial planning terms - include your age (the older you are, the less risk you can afford to take), current financial situation and your appetite for risk. This means whether or not you are prepared to invest in aggressive, moderate - to high-risk products, which potentially may deliver a higher return, or whether you prefer more cautious, low risk products, which may not deliver as big a return, but are steady investments and may even be guaranteed. A combination of risk factors will determine the ideal financial plan for you. Your planner will take these factors into consideration when creating your personal plan.
Your planner will also advise you on the four types of risk you face when weighing up your options:
Institutional risk - relates to the chances of the investment company going under, which is why only reputable companies should look after your retirement funding.
Market risk - affects the portion of your capital that is exposed to the stock market. Understand that the stock market is volatile and that there is a direct relationship between risk and return in the long term. Your planner will know how much risk you can afford in your portfolio.
Inflation risk - another reason why investment in the stock market is necessary. Money loses its buying power over time, whereas equity investments can keep track of inflation over time.
Currency risk - relates to your choice of investments with offshore exposure.
Your planner will help you evaluate your current and future financial status and create a personal income statement of current and projected income and expenses. Your planner will also help you identify additional revenue generators, advise you on how you can save money right now and 'plug leaks' in your personal budget.
Capital needs analysis
How much money will you need to have in your hands on the day you retire? Think about all the things you need to pay for at that time - for example, settling home loans, vehicle finance and other loans, or money to purchase a seaside cottage or an apartment in Paris. These represent your capital needs. You may want to cater for your capital needs sooner than your retirement date. It's up to you. Your planner will include investments in your financial plan that will take care of these expenses for you.
Your planner will help you understand and evaluate all the potential risks in your life and give you advice on how best to provide for them financially. From simple car and household insurance to more complicated life cover to provide for dependants or liabilities in the event of death, dread disease or disability as well as potential loss of income owing to retrenchment or business closure. It's not a nice thing to think about, but it's something that needs to be taken care of and included in your personal plan.
Estate planning is not only ensuring that you have a will and making sure that your wishes in terms of distributing your assets on your death are adhered to. Your financial planner can assist you to ensure that you effectively structure your estate to protect your beneficiaries and preserve your assets. But, perhaps as important, your planner will also help you provide for sufficient liquidity during the winding up of your estate and calculate what estate duties will become payable.
If the value of money halves every five years, how much will you need to live on each month when you retire? Your Nedbank financial planner can tell you exactly how much you'll need and show you how to create enough wealth so that you can maintain your independence, be able to afford the best health care and have the financial freedom to enjoy your retirement. Planning for your retirement is a necessity - and the sooner you start, the better.
Domestic and offshore investment planning
Your investment plan is obviously a key component of your overall financial plan. Your planner will advise you on the optimal mix of global, international and domestic funds and investments created to meet your exact needs and goals. And your planner will monitor these investments over time to ensure that they continue to meet your ever evolving lifestyle and goals.
If you have your own business or are a key partner in a business, you'll also want to be certain that the future of that business is ensured in the event of your death or disability. Your financial planner is able to advise you on how to provide for this eventuality in your overall financial plan and suggest and implement a plan in this regard.
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