There’s More To Financial Planning Than Life Insurance
It’s all too easy to lose sight of financial planning for the future, especially when finances in the here and now are tight. Too many people have whatever life insurance policy and basic 401k that their employer provides (if any at all) as their only preparation for the years ahead. A good financial planner, however, can help you take a look beyond the basics and the present to create a manageable plan to help ensure financial stability for yourself and your family.
The first financial planning step most advisors will take you through is creating a budget — one that includes savings for retirement. The amount you’ve chosen can be automatically deposited into a savings or investment account. This makes it much easier to make savings a habit, and also helps combat the temptation to spend all of your paycheck. For most people, setting aside at least ten percent of your income will help to build a comfortable cushion for retirement.
Of course, regular saving is just one aspect of planning your financial future. Careful investment in stocks, bonds and other instruments can supplement your income both before and after retirement. Since Social Security is designed to cover only the basic necessities, you will need to have other resources in order to live out your “golden years” in comfort and without impacting your preferred lifestyle.
A well-informed advisor is able to analyze all the components of an individual’s future circumstances, such as health, life expectancy, probable inflation rates, how investments are likely to perform, and other factors. Your advisor can also help with wealth management by devising strategies surrounding taxes and interest rates to maximize retirement income.
Should you have additional discretionary income you’d like to invest, your advisor might be able to recommend alternative investments. The possibilities for this are almost limitless, including fine art or wine collecting as well as more mundane commodities such as real estate, hedge funds, venture capital and other types of investments. Your financial planner will most likely also recommend purchasing a commercial annuity that will last throughout your life.
Estate planning is also a matter than many financial planners may tackle. While younger families may not have given this much thought yet, addressing estate planning early is important. You will want to ensure that your family will have a financial cushion if something should happen to you. Your advisor will be able to recommend a life insurance policy that is adequate to your family’s needs, and also how you should designate beneficiaries. Furthermore, he or she can recommend methods of minimizing estate taxes.
Novices and experienced investors alike can almost always reap benefits from expert advice regarding long-term financial planning matters. A good financial advisor can suggest various investment ideas that you may not have considered. These professionals are highly useful in devising a clear plan to ensure financial security for both yourself and your family.
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