To protect your long-term security, the importance of clarifying goals and making informed decisions cannot be underestimated, says the wealth management team at Standard Bank Offshore
THERE is nothing quite like a crisis to focus the mind. For investors, the ongoing Covid pandemic and now a cost-of-living crisis are challenging them in ways that are unlike any time in recent history.
No matter your financial position, it is hard to believe that some adjustments have not been made to accommodate the current state of world affairs.
If nothing else, these crises have reinforced the value of having a proper financial plan in place.
‘A financial plan allows you to clarify your goals and create a clear roadmap to achieve them,’ says Michael Jones, a wealth adviser at Standard Bank Offshore. ‘It allows you to make informed decisions about your money and ensures that you are using your resources in a way that aligns with your priorities and values.’
A financial plan might not have shielded you from all losses in 2022, when major markets were down as much as 20% in the year, but a well-diversified portfolio would certainly have lowered your exposure to risk assets.
Michael suggests that anyone with international financial interests would benefit in the current conditions from focusing on the following five key priorities.
Protection is the foundation of financial planning as it gives you the peace of mind that you and your dependents can maintain your standard of living. You can buy protection in the form of insurance that covers you against long-term illness or an inability to work, and through proper financial and estate planning.
Your long-term wellbeing is directly tied to the performance of your investment portfolio. It makes sense therefore to draw on the expertise of a professional adviser who can structure your investment plan so that you achieve your financial goals. Partnering with a professional adviser has the added advantage of giving you the most up-to-date knowledge and expertise to guide your decision-making.
Retirement planning sometimes gets overlooked and pushed to the bottom of the priority list. However, there is a great advantage to be had from ensuring that you are using the most tax-efficient savings strategies that will allow you to live the retirement lifestyle you dream of.
Estate planning is another crucial responsibility that is often missing from a client’s financial plan. This can have significant repercussions when considerable wealth is involved but is just as important for anyone with international financial interests.
Not only should you clearly lay out how your legacy is to be continued after your passing but you also need to review this plan on a regular basis. By keeping this up to date, you can help to avoid snags and delays when it comes time to administer your estate.
Given the complexities of managing assets across international jurisdictions, it pays to use a professional adviser to stay compliant while optimising your estate.
This aspect of your financial plan takes on even greater significance if your financial assets are spread across more than one jurisdiction. Different tax laws and treatment can make this tricky to navigate unless you have an international tax expert guiding you.
‘Working with a financial planner enables you to construct a clear long-term strategy that is specific to your circumstances and incorporates all the key aspects of financial planning,’ Michael says. ‘Keeping your plan under regular review ensures that it continues to be relevant and that any changes that are needed can be implemented.
By focusing on the bigger picture, you avoid the temptation to get swayed by shorterterm market movements. And never underestimate the value of diversification and asset allocation in positioning your portfolio to absorb any shocks or volatility in a single asset class.’