Provided by MAGELLAN:
THE FINANCIAL PLANNING COMPANY
As the year’s end approaches it’s time to pay off any outstanding debts and clear away the paperwork needed for your Japanese tax return. In short, it’s time to spruce up everything for the New Year so you can start 2008 with a clean financial slate. Think of it as an annual medical check-up for your finances.
Why is this check-up so important? It allows you to review your 2007 goals and measure your progress, taking into account changes such as the birth of a child, the death of a loved one, the loss of a job as well as any major purchases. For the goals that you did not achieve, you can slot these into your 2008 plan, making any appropriate changes to fit them in. Don’t forget that financial plans are not ‘set-andforget’ documents: to be truly reflective of your own changing situation, they must be reviewed regularly.
Don’t panic about doing this all on your own. For the utmost objectivity in sorting this all out, you can make an appointment with your financial planner to help you. After all, you certainly wouldn’t do your annual medical check-up without a doctor!
But what exactly should you and your financial planner examine in your annual meeting? Typically, your adviser will have already collected your data, prioritized your goals, examined your available resources and thought of recommendations prior to the meeting.
This sort of monitoring benefits both parties. The detached, objective perspective from your adviser provides a clear impression, free from your busy daily life, of how realistic your goals and priorities are, while taking into account any life changes that have come into play in the preceding year.
When measuring the performance of your portfolio it is important that absolute and relative increases can be measured against specific benchmarks such as the Dow Jones, NASDAQ, FTSE or other global indices. Your adviser will make recommendations on changing your investment portfolio in light of the changes to investment asset allocations, in following with global market movements.
If you have added to your family, such as the birth of a child or grandchild, then your meeting may require a discussion about life cover or savings plans. A divorce may require changing beneficiary designations on retirement accounts, life insurance policies and wills.
In addition, it’s a great time to catch up on new research or investment areas, such as alternative energy, water or infrastructure investment opportunities, that have become available and could benefit your shortterm or long-term investment goals. As we get older it becomes time to prepare for contingencies, including the escalating costs of nursing homes and health care in retirement for yourself or for your aged parents.
In summary, year-end financial reviews provide a chance for you to examine your long-term goals. These reviews establish whether you are on course with your financial goals or whether you need to put fresh plans in place to anticipate changes that may occur in a planned (rather than haphazard) way. It is an easy way for you to see if you are off-track financially and what corrections can be made to get back on the correct path in the shortest amount of time possible.