Nonetheless, there are many who simply live day-to-day, without much thought and preparation for the future. Unless you are contended with what you are presently doing and no worry or concern about your future and heck care, then simple life would do you better with no stress at all and probably you live life up to a century.
Some steps to taking charge of your future include having a plan, identifying your present resource position and allocating your resources to the right places. You should also establish a series of capital preservation programmes to enhance your savings as you move towards the retiree stage, and institute a proper distribution and succession plan for your loved ones.
In many instances, when reality finally catches up, people are caught off-guard and suffer the painful consequences of their careless attitude and you may find it too late to turn your steering around to miss the deadly corner.
One of the keys to achieving lifetime success financially is to engage in any higher level of education. Example, Financial education, which is more than just acquiring information and knowledge. Financial education is more than just knowing the facts if you want to make sure your financial portfolio continues to grow ( look at remisier king, Peter Lim, his wealth management is certainly up to mark with his piggy bank non stop growing ).
The real process of financial education should entail:
The real process of financial education should entail:
• Acquiring financial knowledge
• Being connected to the financial community
• Being engaged in financial development
• Being mentored by financial experts
• Being courageous to explore financial options
• Being clear about your own financial destiny
Financial planning creates a well-planned and well-organised time line that can withstand three major shocks:
A proper risk management portfolio (RMP) must be established for your time line to manage all your risk exposure efficiently and efficiently. A RMP is the combination and coordination of a portfolio of risk management programmes to manage the different aspects, levels and degree of impact of the risks that you are exposed to everyday.
You may have purchased insurance policies without much consideration and coordination as to the scope of coverage, level of coverage and cost of coverage. As a result, you may be implicated in one of the following:
• Coverage that is not comprehensive enough - risks that you should have been covered for, but are not.
• Too low coverage amount - risks that you are currently covered for, but at too low a level.
• Too high in overall premiums paid - paying a larger premium than necessary.
These inefficiencies can be avoided by insisting that you are given a thorough financial health check before any insurance plan is recommended or purchased.
You should also insist that you are given a comprehensive selection of the insurance plans from different companies to compare and choose from so that you can have the best option in terms of coverage and premium costing, and insist too on being given a complete report on how your overall risk management portfolio can withstand the three shocks described here.
One of the most overlooked aspects in risk management is the risk of 'self-funding shock'.
A classic example can be found in the way most people manage their medical risks. The cost of medical insurance plan increases every three to five years, depending on the medical plan.
If you are struck with a critical illness like cancer or heart attack, most probably you will be out of work for some time, and maybe even a long time. This could create a great challenge - who is going to pay the premiums for the medical insurance plan which is rising every three to five years?
The premiums can reach an unaffordable level after a few rounds of adjustment, so unless a funding mechanism is structured within the overall Risk Management Portfolio, your savings or cash reserves will be wiped out rather quickly.
Therefore, it is important to ensure that your overall risk management portfolio is able to withstand the self-funding shock and at the same time, provide you and your family with lifetime financial security.
A risk management portfolio without any element of protecting you against market shock can only be as good as temporary protection. We have seen so many cases in which the risk management portfolio was wiped out completely due to the inability to keep the program going in the midst of an economic or market crisis.
Market shock can only be managed through proper strategic planning. Understanding how the various impacts that inflation, economic data, interest rate and liquidity have on the market is vital to the successful management of your money in the capital market, be it fixed income, collective investments or direct investments.
Depending on your risk profile, your funds can be invested into tactical growth, balanced and income funds. The percentage of allocation into each of these investment categories will depend on your risk appetite, investment objectives, time horizon, capital desired to be accumulated and the portfolio returns needed to achieve your investment objectives.
Your objective here is to construct an investment portfolio that can withstand market shocks and also give you a decent rate of return of between 8 per cent to 12 per cent annually. Do note that profit earnings do not come free of risk and the higher returns (ROI) you expect, the higher risk you would be facing when you plough your liquid assest into some investment. Make sure your portion of buffer is sufficient in your reserves with part of your dollar thrown into risk investment. The risk here we are not referring to the recent risk that a businessman has taken at the Resort World casino making a loss of over $26mil, that kind of irrational gamble deserve no pity at all.