The process starts with you working hard for your money. You are setting the stage for becoming financially independent. There are many dynamic planning issues to consider as your life is constantly in flux from changing jobs and homes, marriage, children or a new business venture. Targeting the right amount of growth is important so that the goals you are setting are not only realistic, but also achievable.
During these prime years, it will be important to maintain discipline, and to put in perspective what you want to achieve. Building true wealth requires investing differently from the crowd and having conviction in your blueprint to wealth creation.
Here are some questions you should be asking during asset accumulation:
- Do I have a comprehensive and updated financial plan?
- Do I understand what I am invested in and is it appropriate for my risk tolerance?
- Do I know the performance of my investments net of fees, and is it enough to meet my objectives?
Now that the process to wealth creation has been defined and set forth effectively, it is now important to safeguard what you have accumulated and protect your financial independence into the future. Your money must now work hard for you.
It is worthwhile to revisit your targets and goals as they may have changed. A thorough review of your financial plan is warranted so that you can pro-actively account for any material changes to your situation.
Here are some questions you should be asking to protect your assets:
- Are my assets positioned too conservatively, and am I generating the right kind of cash flow to protect against taxes and inflation?
- Am I properly protected from negative market events that could significantly impact my portfolio?
- Have I updated my plans to account for outstanding liabilities, to consider benefits that have a sunset, and to ensure tax efficiency?
Due to your diligence and the guidance of your advisors, you have managed to build and protect a successful retirement. All your hard work has paid off, but the work is not yet done. It is now important to secure your assets for the next generation and for other legacy wishes you may have.
For your plans to come full circle there are numerous estate planning decisions to consider. Ultimately, the transition of your assets to your beneficiaries must be orderly, and distributed in the manner in which you intended.
Here are some questions you should be asking to ensure a smooth transition of your assets:
- Do I have a will and a mandate, and are they up to date?
- Have I assigned a knowledgeable and trustworthy executor?
- Is there a need for a trust to structure an orderly transition of assets?