The Importance of Having Clear Goals

Clients often seek financial advice, stating reasons such as “to improve returns” or “to get richer”!

While these seem reasonable requests, we then need to uncover:
1)Why do you want more money and how will you use it?

2)For how long do you intend to invest your money before withdrawing to use?

3)What level of risk are you prepared to take and how much money can you afford to loose?

A better approach could involve:
1)Clarifying your financial goals and time frames.

2)Calculating the capital required to achieve those goals.

3)Formulating a realistic strategy to achieve your goals. This would include include contributing to superannuation (SMSF or public fund), share and property investing or borrowing to invest. The more simple and lower risk strategies that will allow you to achieve your goals are often best!

4)Constructing a well diversified investment portfolio that exposes you to the level of risk necessary to achieve your goals. Your personal preferences, risk tolerance and investment time frame all play a part in these decisions. Further, the portfolio could be built using a variety of investment types, including managed funds, direct share or property investments, exchange traded funds etc.

Of course, if your financial goals are unachievable, you will need to downgrade your aspirations! Alternatively, you may be prepared to save more/spend less, stay employed for longer or accept more risk to make your goals a reality.

In some cases, your accountant may need to provide advice on the tax implications of using a particular structure for investment, such as a family trust, company etc.

Further, for some non retirees, having adequate life, disability, trauma and income protection insurance can provide an additional layer of protection by allowing you to avoid the forced sale of investment assets and the potential for capital losses to be incurred.

Also, a visit to your solicitor to update estate documents such as your will, enduring power of attorney and advance care directive may be required to ensure that your assets end up with the
right people at the right time and in the most effective manner as intended.

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