On 6 April 2018 we moved into a new financial year. Okay, it probably wasn’t marked with street parades or fireworks, but it’s certainly worth taking note of. Especially as all of your allowances were re-set and a fair few new rules and regulations will be put in place during the following twelve months.
Like most sensible people you may have some form of plan in place that delivers an end result for your future. However you’d be surprised at how many of us don’t have a proper map of how to attain our desired retirement. If that’s you, don’t panic – you’re not alone, but this may be the time to seriously start thinking about putting some plans in place.
Start the new financial year with this new thought
What I tell all of my clients is this: Your financial plan should be seen as a journey, much the same as if you we’re going to go hiking in the mountains. Just like when you set out into the mountains, your financial plan is going to need some specialist equipment and an expert guide to make sure you reach your goal safely, successfully and within your timescale.
There’s a saying in the hiking community that is mirrored in financial services: “Hope for the Best – but Plan for the Worst”. So that’s exactly what we need to do.
The first step of your journey
No one sets out on a journey without knowing where he or she wants to get to. It’s exactly the same with your financial plans. The most important part of your journey is identifying precisely where you want to end up. In terms of your financial plans, this should be a clear idea of the goals you are aiming to achieve at the end of your endeavours.
Once you have worked out a realistic destination, with the help of your guide in the form of your Independent Financial Adviser (IFA), then you can ensure that you have the right route mapped out to achieve your financial goals.
Keep your eye on the path
A critical part of any hike is making sure that you are headed in the right direction. Your IFA should be there at regular agreed intervals to sense-check everything is still on-track for you. They will, if necessary, make course-corrections and adjustments.
Should your circumstances change, but your goals remain, then they are there to re-plot your course to help make success achievable.
Don’t be put off with changes in the weather
Any hiker will tell you to pack your rucksack for spring, summer and winter – and expect it all in the same afternoon. It’s the same with a long-term financial plan. You will enjoy bright sunny days as well as stormy ones. The trick is to remember that just like the weather, things change. As long as your IFA has planned properly, then the ups and downs of investment returns will be as planned for as the ups and downs of hill walking.
Enjoy the places of interest – just don’t stray from the path
If we see a crowd gathering and pointing at something eye-catching on a hike, there’s nothing wrong with stopping to take a quick look.
It’s the same with your financial plans. You’re going to be distracted with countless bandwagons trundling exotically up and down the path. What we don’t do however is re-define the purpose of our journey and build a new route around jumping on the back of one of them.
Distractions can send us off course and often mean that there is a price to pay in getting back on the right path. A good IFA is there to keep your attention off the many distractions that, once you’ve notice them, have usually already been priced into the market.
There are multiple paths on the mountain, so be flexible
There are many routes to the summit and more often than not, you will come off an established path to take advantage of a shortcut, stop and eat your sandwiches or to avoid an unexpected change in the terrain. It’s the same with your long-term financial plan. It’s ok to come off script, if and when your IFA advises that it’s the right thing to do. It maybe a reaction to interest rate fluctuations, or the temporary movement of investments into or away from higher risk profiles. Whatever the changes, just think of them as adjustments in the route, designed to ensure you reach your goal.
The thing to remember is that unpredictability and uncertainty are a part of your financial journey. A good guide, in the form of an Independent Financial Adviser, is aware of that and they will plan accordingly; and have contingencies ready to put in place.
Everyone is on the mountain for different things
Next time you go hiking, just remember that all those you’re sharing the countryside with are there for different reasons. Some for the view, some to beat a record, some to collect ‘peaks conquered’ and some for the escape from their daily lives. Well it’s the same with your financial plans. No two are ever alike, as we all have different goals we wish to achieve.
The one thing everyone always has in common however, is a respect for the mountain and a sensible approach to the task ahead. It’s the people who set-off without any real goals, the wrong equipment and no map, that are the ones the brave men and women of mountain rescue get called out to find.
Build a bridge to your financial future
As ever, if you have any questions regarding any aspect of planning for your future, then please contact us at Bridgewater Financial Services where we will be delighted to help guide you through the options available to you.