In this final article before the Christmas break, my initial thought was to write a ’12 days of Christmas’ knock off with a financial advice theme – but do you know how hard it is to get something that scans and rhymes, whilst making sense? Even the Financial Conduct Authority don’t help, by insisting on having six golden rules of investment instead of the (in context) more helpful five.
So instead, here are ten Christmas thoughts that you might want to turn into New Year’s resolutions for 2024.
- Decide your goals – some of us are happy just pottering along, but most of us have some ‘bucket list’ aspirations and writing them down, talking about them to other people, and working out what you need to do to make them happen, makes them more achievable.
- Have a plan – too many of us just drift from day to day to year to year, maybe doing many of the right things financially, but never checking to make sure that we’ll be OK in the future. Whether you’ll have enough money or not when you’re 80 is something that is much better discovered and addressed when you’re in your 40s than your late 70s.
- Check the basics – Do you have a valid and current will? Are your powers of attorney up to date, and do your attorneys know your views on medical treatment, and how you might like your money looked after? Too often these matters, which can be critically important are left until it’s too late.
- Check your insurance – if you have an income and need that income for you or your dependants, and that income might stop if you got sick or died, then you need to think about insurance; especially if you have liabilities such as a mortgage. Don’t just assume everything is going to be fine. For most it will, for some it most definitely won’t.
- Have a philosophy – many of our clients have only the very loosest grasp of how investment works when we meet them, with beliefs not grounded in evidence and treating long-term investment more like gambling. Whether you agree with our approach based on decades of research, or develop your own, having a strong philosophy of how money should be invested is important, as it provides a gauge to judge how good a job is being done.
- Analyse your risk tolerance – everyone is unique, we’re all the same like that. One of the ways we can vary from one another is in how we react to risk, specifically investment risk. How much of a downturn can you accept before panicking. In 2020 markets dropped perhaps 45% in 6 weeks or so, then recovered strongly. Anyone who panic sold in April 2020 missed out on the recovery. Only take the amount of risk you can deal with when it doesn’t go your way.
- Decide your relationship with money – I know that sounds a bit bohemian, but where does money sit in your list of priorities, and what might sit higher? This helps inform all sorts of things like whether you would work longer for a better retirement, or perhaps accept a bit less in retirement in exchange for more years with your family.
- Quantify your emergency fund – To quote my chairman, (who in turn was quoting his old boss, and I have no clue if it was original then) “It’s not that I like cash, but it helps me sleep nights”. Everyone should have a reserve which is available, won’t be wasted, and is there if you really need it. Not having cash in a moment of crisis is enormously stressful, and if at all possible, to be avoided.
- Think about taxation – It is an obligation on citizens to contribute to the funding of government and public services according to their financial abilities and the law, but it is a right to take advantage of allowances and reliefs where available to minimise that tax. There are many such reliefs and allowances available, and they can make a big difference to your long-term financial position.
- TAKE ACTION – any plan is only as good as the execution of that plan. As Mike Tyson once said, “Everyone has a plan until they get punched in the mouth”. To reach the goal of achieving financial security, living a good life, and making the best of everything will require both planning, and action, and replanning, and reaction. Circumstances change, and plans and actions need to change along with them. Adaptability is key.
A lot of people don’t think of finance as fun, or even interesting – I know I’m a bit weird like that – but most of us do recognise that it’s important.
At this time of the year, when we have a bit more time, it’s worth sitting down and revisiting where you’ve got to and how we’re getting on financially.
At Walden Capital we passionately believe that a bespoke financial plan, created with inspired thinking will help you sleep at night, and take away the burden of worrying about whether you’ve done enough, by providing the assurance you need to feel safe. If you would like to know more, get in touch.
We wish you all a very Merry Christmas 2023 and a tremendous New Year for 2024.