Your Life Stages
Life is full of changes, and with each new set of circumstances come new financial considerations. Priorities change as you age and during different phases of your life. Regardless of where you are in life, Aisa will provide you with advice that pertains to your situation.
By having a sound overall financial strategy you are able to recognize that your finances are in a constant state of change. Understand where you are and where you ultimately want to be. Not only do financial markets fluctuate, but your financial needs also change over time. However, it is far easier to predict the changes in your financial life stages than it is to predict the direction of the financial markets.
When you’re young, your expenses are higher and saving is very difficult. If possible it is essential to start saving early to ensure financial stability. Make plans to meet your medium-term goals in between starting out and retiring. This may include paying for your children’s education, or buying a home or car.
So ask yourself, what in your lifestyle is important to you now and in the future, what do you want and what can you not do without? If you feel that you are ready to take that important next step and to start or reassess your personal financial plan, please contact us.
Attitude to Risk is a Factor
There are two different considerations when discussing risk: one is your overall attitude to risk for your estate, and the other is the specific risk that you are prepared to take with the investments you are intending or being recommended. The two are not necessarily the same.
If I asked you if you were prepared to invest your home to produce a 20% growth, but the downside is you could lose your home, you are unlikely to be prepared to take the consequence of loss whatever the possible return. This is because it would have such a large impact on you if it were to fail. If, however, I asked if you were prepared to invest 2% of your investment in assets which could produce 20% growth, with the same scenario of possibly losing all of the investment, you MAY be prepared to take the consequence of loss as it may have very little, if any, impact on you.
There is one further important note to add here – by spreading and diversifying investments you are reducing the risk of an investment. Whilst it is true to say that any equity holding you hold shows you are prepared to see fluctuations in the value of those investments, that is an over simplification. Classifying equity holdings as high risk once again ignores that holding shares in one company is far riskier than holding shares in 100 different companies.
Finally, the length one holds an investment plays an important part in assessing risk.
More information? For answers and help contact us.
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