Financial freedom looks different from one person to the next. Having a financial plan that can help you protect and grow your funds can be beneficial in more than one way. But where do you start?
With only 6% of South African's being able to retire comfortably and 54% of people unable to make their finances last until month end, having a financial plan that works with your financial situation is more vital than ever.
Speaking to a financial advisor can help you tailor your finances into creating a sustainable safety net. If you are not sure where to start, we have these five tips to get you started.
Please note:
The tips that are provided should be used as a general guideline and not as financial advice. Please consult with a financial advisor to find a plan that will be best suited to your financial situation.
What are your financial goals?
Whether your goal is to start estate planning, investing or improving on your financial plans having goals will be at the centre of what you do. It will be your northern star that keeps you going and focused, even when times are tough. Before anything else, make sure that you have a list of financial goals you would like to achieve. Make sure these are realistic by speaking to a financial advisor who will be able to consider your situation. Don't be afraid to set time frames that can motivate you to achieve your goals.
Invest according to your tolerance of risk
Are you planning on investing? There may be a range of investments that you have your eyes set on or are currently researching, but an important thing to keep in mind when it comes to investments is your tolerance of risk. Striking the right balance for you is understanding the level of risk you can afford, which is why it is crucial to consult with an investor or a portfolio manager that can make investments in your interest.
Start with the basics by protecting what matters
While you may have the big picture in mind of where you would like to end up financially, it's vital to have the basics in place. Protecting your stream of income is one of the things that will keep you financially afloat even when the markets or your job performs in ways you were not anticipating. Furthermore, having measures in place that will protect you and your loved ones from unforeseen circumstances such as being diagnosed with a terminal illness or even death can be beneficial. Make sure that you have your bases covered with things such as a legally recognised will, a life insurance policy, funeral cover and disability cover.
Avoid putting all your eggs in one basket
When the time comes, you will need to diversify your financial portfolio to have the right mix to benefit you. Aim to build a portfolio that focuses on income and growth to give you a well-rounded portfolio. An income orientated portfolio will help you generate capital appreciation which will help you receive a regular and steady stream of income while a growth-orientated portfolio will assist in capital appreciation which will increase the value of your assets.
Start where you are
The best time to start when it comes to building a financial portfolio that works for you is now. Using what you have and gradually building towards your goal can help you become better prepared for whatever the future holds for you. You may not have all the answers, which is why there are financial advisors, planners and investors who will help guide you on each step of your journey towards creating the financial freedom and security you seek.
