Wealth management is a deeply personal, long term process that will differ from person to person depending on their circumstances and goals. Whilst it is imperative to take this into consideration when developing a strategy to achieve financial objectives, there are four main concepts that are applicable to almost all financial planning journeys and are important to bear in mind.
Managing finances and budgeting
The first, and arguably most important part of establishing a secure financial future is managing your income and assessing your spending habits. Without a holistic understanding of how much money you have coming in and where that money is going, you cannot begin to construct a long-term wealth management plan. This can be complicated if you have multiple streams of income, but monitoring these and creating a comprehensive, realistic budget that you can stick to, should be at the top of your list when establishing and maintaining control over your finances.
Investment and Risk Management
It is widely acknowledged that investing can be one of the most lucrative ways to generate passive income if you are equipped with the relevant experience and knowledge. While contributing to a savings pot is of course essential, this money will not be fulfilling its potential for you if it remains uninvested.
Risk Management is a key part of investing and aims to maximise the value and growth of your assets whilst minimising the risk of loss. Diversification is one of the many ways this risk can be reduced, as it ensures that not all your eggs are in one basket.
When it comes to investing, everyone will have a different level of risk tolerance; whilst one individual might be comfortable with investing in a high-risk portfolio, others might feel far more at ease sticking to low or medium-risk options. Allowing external influences to persuade you to take higher risks that you are comfortable with can be detrimental to your mental well-being, so be sure to stick to an investment strategy you have confidence in.
It is also important to bear in mind that whilst investing is an essential part of wealth management and growth, it is essential to maintain an emergency fund that is not tied up in investment, so you have quick and easy access to cash should you need it.
Planning for retirement
When strategizing the growth of your assets it can be easy to get caught up in short-term results. However, in order to achieve true financial stability, planning for retirement is absolutely imperative. Visualising the kind of lifestyle you want to achieve, at what age you want to retire and where is the first step to making that dream a reality. The longer you wait to start preparing for the next stage of your life, the more likely you are to have to compromise on that dream.
Tax efficiency
Tax is an inevitable part of investing and wealth management, but by ensuring tax efficiency you can reduce the impact that it has on your profits and growth. By making the most of annual allowances or government initiatives, you can potentially save yourself thousands in tax bills over time, and decrease the time it takes to achieve your financial objectives
The world of tax and tax efficiency is often complicated and somewhat inaccessible with costly fines for those who do not fulfill their tax liability. The risk of these consequences can be minimised with the assistance of a professional adviser who is familiar with local laws and legislation.
At Blacktower, we can assist you with all of the areas above and help you to develop an effective and bespoke wealth management strategy to help you achieve financial stability or grow your assets.
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This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions
The start of a new decade, and with it the beginning of a new era for Britain and its citizens in the form of Brexit, represents the perfect time to review your wealth management plans. From taking a look at the suitability of your asset allocation and your pension savings to reviewing your tax and estate planning, now is an especially pertinent time to develop a clear path into the future.