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Our role as a Financial Planner is to help you do more with less. To do so we help you:
- Gather information about your current financial situation, what you earn, what you own, what you owe, and what your future commitments will be.
- Determine your financial goals for the short, medium, and long term.
- Create and implement plans which will ensure that you have what you need to meet both your commitments and your goals.
- Budget to ensure that your financial goals are met and you gain long-term control of your financial situation.
- With the administration and implementation of your plan to achieve the goals that have been set.
- With the periodic review and revision of the plan so as to ensure attainment of the goals.
It appears that we are hearing or experiencing a disaster of some kind almost weekly at present. We have had the Australian floods, the Christchurch earthquake, the various North African uprisings and now the Japan earthquake and tsunami. No doubt, many investors will be asking themselves what they should do.
The answer is simple: stick to your long-term plan. For most investors, this will mean sitting tight and doing nothing.
In times of upheavals and uncertainty, there is always a temptation to do something hasty, but it should be resisted. Unless you actually need your money now, withdrawing is a kneejerk reaction, rather than a rational response.
Recent global events such as the earthquakes in Christchurch and Japan, and the unrest in the Middle East, have really got people thinking about their investments and when is the right time to re-evaluate an investment portfolio. Should it occur as a result of a high profile natural disaster, global unrest or a personal traumatic event? Or should it occur as a result of a premeditated decision to regularly review our financial circumstances?
We are all tempted to make decisions during emotional events, and the recent earthquakes and political unrest are no exception. However, this is often not a good time to make decisions about an investment portfolio, in large because we don't always get accurate information about these events and it's difficult to predict the impact these events will have on the market.
Natural disasters are unpredictable and in many cases can be life changing for those caught up in them. The recent earthquakes in Christchurch have got many Kiwis talking about and actively putting their survival plans in place.
Whilst the main emphasis should be placed on preparing for the immediate survival of your family from a natural disaster, for example meeting points, food and water, we shouldn't overlook the financial needs and possible financial issues that will arise as soon as you've established your loved ones are ok.
Consider that banks could be disrupted, limiting access to cash. Government assistance, insurance, and other financial relief (which may or may not cover your total loss) may not return you to the financial position you have previously enjoyed.
Ultimately, you'll remain responsible for most if not all of your debts and other financial obligations, and as soon as disaster hits, you'll start to feel the pressure. However, it won't hurt as much if you are prepared.
Consider the following tips to help manage your financial situation:
Most people want answers to "how long will I live" and "what can I do about it".
Most people have no idea how long they might live. The starting point is your current age. You could then use various life expectancy tables available but these are only averages and also fail to factor in ongoing improvements in mortality. They don't explain that the longer you live, the longer you're likely to live. Or that ageing is a personal journey.
My Longevity is an Australian website that attempts to help you answer these questions. According to the CIA's website (true, you can check for yourself here) the average Australian's average life expectancy is 81.81 years, whilst a New Zealander's average life expectancy is slightly lower at 80.59 years. So you should probably take a year off My Longevity's answer if you live in New Zealand. (Bugger, that mean's I'm only going to live to 80. Ed)
We have all been Shocked by the Disasters in Christchurch and now Japan
Many of us have friends and family who have been directly affected and our thoughts go out to them and all the other people suffering through the aftermath of these dreadful disasters.
Someone in Christchurch said that the only good thing about the earthquake in September was that it made them realise how unprepared they were and so they took action and were much better equipped to deal with the February earthquake. Events such as these can serve as a warning and reminder to the rest of us to prepare for the worst and hope for the best.
At Investment Research Group we are experienced with preparing retirement plans, financial plans and estate plans which are all important strategies for managing the risks we traverse as we go through life. But when it comes to areas outside our area of expertise we go to the experts.
Be Prepared
The inside back cover of the Yellow Pages telephone directory is titled "Get Ready Get Thru" read it and have everyone in your household read it and then do what it says. If you have children, or grandchildren, perhaps you could enlist their help to make an emergency plan and discuss it with the family. If they are at school chances are they have discussed it at length in class and could do a very good job with a little assistance.
It is difficult for us to prove that our financial adviser services are worthwhile so we were pleased to see the following media release from The Financial Services Council, the peak body representing Australia's retail and wholesale financial services industry for funds management, superannuation, life insurance and financial advice businesses.
16/02/2011
Aussies are Better Off with Savings Advise
The Financial Services Council today released independent research showing people who receive financial advice will be almost $100,000 better off at retirement simply through learning better savings behaviour.
The Council's research shows a 30-year-old would save an additional $91,000, a 45-year-old would save an additional $80,000 and a 60-year-old would save $29,000 more than those without a financial adviser.
These amounts are conservative, do not take into account the additional benefits of comprehensive investment advice and are on top of the $594,000 the Government estimates an average 30-year-old will have in their superannuation when they retire.