The solution to your resolutions
New Years Resolutions #1
Do you need a financial adviser or not?
As the year turns, many investors are looking back on favourable results in 2017 . Will the party continue in 2018? Or will the bears take away the punch bowl? No one can know.
But what can be known is that savvy financial planning will pay off for you and your loved ones.
If you have never sought the help of a financial adviser, you may be wondering whether there is any value in seeking advice from an independent professional, or if you should go at it alone.
According to Jeanette Marais, director of distribution and client service at Allan Gray, not every investor may need, want or be able to afford an adviser, but there are times when seeking professional advice makes all the difference.
“Good, independent financial advisers (IFAs) play an important role in helping you make decisions that are right for your circumstances,” says Marais, adding that while many investors are reluctant to take on the advice fee, advisers can make and save you money in the long run, earning their keep time and again.
“It is not impossible to invest on your own. However, an adviser has the objectivity and experience to help you meet the full range of challenges you might face and help you stay on track.”
5 things to keep in mind :
You want to put a plan in place, but you have no idea where to start
An Independent financial adviser can help you develop a long-term plan that meets your objectives
If you have money to invest take the time to consider your long-term needs.
Do you need to save for your child’s education? Do you need retirement savings? Etc.
‘An IFA can help you shape all your future commitments into realistic goals. An IFA will also help you to keep on track in uncertain times.
Remember the golden rule: if your circumstances don’t change, your investment plan shouldn’t change’ – always keep in mind why you started in the first place.
You need to choose an investment product, but you suffer from analysis paralysis
There are so many different products available that the choice itself can be a huge barrier. Different products suit different investment objectives – some have tax benefits and others have restrictions that you need to be aware of before committing. It’s important to read and understand the fine-print.
While researching every product that is available is not impossible, it can be overwhelming and time-consuming. An IFA can and will be able to assist you in working through the options and making suitable choices for your unique situation.
Your life circumstances have changed – or are about to change
Getting married, buying your first home, having children, inheriting a large sum of money, or retiring – different events introduce new financial challenges – and require you to think and invest differently.
Just thinking about how to manage your money during each of these life-stages can be confusing, and balancing your responsibilities can be tough, adding that financial advice is crucial in order to navigate the “how do I…?” questions that inevitably arise during any of these big changes, and through the course of ever changing life stages.
You are changing jobs and have no idea what to do with your retirement ‘windfall’
If you are changing jobs, make sure you preserve the retirement savings you have built up. If you do not, your retirement plans are likely to suffer a setback. In some cases, not only do you end up spending the capital you have accumulated, but you give up the future compound interest.
To illustrate this, Janette Marais (Allan Gray) uses the following example: If at the age of 35 you choose to take your retirement savings in cash when you resign, as opposed to preserving it, you will have 40% less to live on when you retire.
Put differently, assuming you take 70% of your final salary (escalating at inflation) as a pension when you retire, your pension will run out 12 years earlier than if you had not taken your retirement savings in cash when you left your employer.
A financial adviser can help you stay on track and deter you from spending your retirement savings when you change jobs.
You are drowning in debt
The so-called silly season had many South Africans throw caution and their budgets out the window to enjoy the annual extravagant holiday activities and sprees. Splurging on unnecessary ‘summer essentials’ and gifts or flashy vacations can however lead to a financial hangover in January.
If your biggest financial need is paying off debt, it may be premature to seek the services of a financial adviser.
“You may wish to rather speak to a debt counsellor. However, as with financial advisers, not all debt counsellors are alike,” warns Marais. Only counsellors who are qualified and who are registered with the National Credit Regulator (NCR) may offer debt counselling services.
However, if saving for your future dream holiday is one of your New Year’s resolutions – an IFA will definitely be able to help you with a solution.
Salvo Capital (Pty) Ltd is a registered boutique financial service provider and Investment manager.
Contact us today.