Checklist for Making Sound Financial Planning Decisions

Checklist for Making Sound Financial Planning Decisions

When making financial planning decisions, people tend to focus excessively on two factors: fees and performance.

A few points on way or another can sway their decisions on where to invest. This makes a degree of sense, but too often, this approach distracts investors from equally important considerations.

Take cash flow management – the bedrock principle of financial planning, he says. How much money do you need in your pocket and how much is free to invest? Can you accurately predict how your income will grow in the future? Estimating cash flow in retirement is a key goal, as it will determine your future level of comfort and security. Cash flow is king.

Your savings rate is important because, as our author notes, it’s the only thing a person can fully control. The performance of market assets is unpredictable, but one thing is certain: money invested will work in your favor, slowly and steadily or with a wild ride for all, perhaps, but ultimately it will serve you in retirement. Money expended on unneeded fripperies is gone for good.

Asset allocation: according to experts cited in the article, this is the most important factor when constructing your financial plan – it even trumps returns. If the matter has escaped your attention, it’s time to have the asset-allocation talk with a specialist.

Estate planning is a touchy subject, but unpleasant matters tend to require the most urgent attention. Who would care for you if accident or illness leads to incapacitation? Who would manage your affairs to assure the bills are paid and dependents are cared for? There are many valid reasons for establishing an estate plan and all require thoughtful consideration.

For more information, please read:
Fees, Performance and the Bigger Picture | Wealth Management


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