Financial Planning – Creating a Financial Resolution

Your Financial New Year Resolutions: 6 things to consider in 2018

1. Review your Finances / Make a Financial Plan

There is arguably no better time than the New Year to give yourself a financial health check to allow you to gain or in some cases re-gain greater control over your finances over the next twelve months and beyond.

2. Make a Will

This is one of the most important aspects of financial planning that often gets overlooked.  It is imperative that you take control over your assets whilst this ability is still available to you and is especially critical where young children are involved.

3. Retirement Planning 

There are a myriad of options with varying degrees of complexity available to plan for your retirement, so therefore it is essential that you seek the advice of a financial professional so that you choose the correct option.

Key points to consider for Retirement Planning

• Set a Retirement Goal – How much income will you to need in retirement?
• Is there a Funding Gap? – What is the gap between the income you will have and what you would like in retirement? Include State Contributory Pension, rental income, income from private pensions.
• Tax relief – Maximise the tax relief available to you on pension contributions – the older you are the more tax relief available!
• Investment Strategy – The lower your investment growth, the more you will need to contribute to your pension. Develop an appropriate investment strategy suitable to your risk profile and your age to deliver the results you want.
• Post Retirement Options – If you are planning to invest in an ARF after you have taken your retirement lump sum our investment horizon is 20+ years so your investment strategy should be different than if you are going to purchase an annuity in retirement. This should be planned well in advance of your retirement date.

To see more on Retirement Planning click here.

4. Protecting your Family in the event of death and illness

•  Term Life Insurance – Life Insurance provides the opportunity to leave a cash lump sum for your family in the event of your death over the term of the policy.
• Income Protection – The function of income protection is to provide a regular (replacement) income in the event of being unable to work after a certain period of time due to injury or illness.  Cover continues until age 65 or you return to work. The payments on your plan are eligible for income tax relief at your marginal rate of tax.  It should be noted that Incapacity benefit is treated as normal income and so is assessed for income tax, PRSI and the Universal Social Charge. To find out more about Income Protection click here.
• Specified / Serious Illness Cover – Specified Illness Cover provides a lump sum in the event of contracting a specified illness that is covered under the terms of the plan that is taken out.

5. Long Term Investments and Understanding Investment Risk 

Currently, deposit interest rates are struggling to match inflation rates, however it is a worthwhile exercise to speak to a financial advisor as to how long term investment (5 -10 years+) can potentially provide a greater return for your lump sum investment.

Unfortunately, risk is inseparable from return as most investments involve some degree of risk, which can be very low in some cases but higher in others.  It is therefore essential to ascertain each individual’s appetite for the amount of risk that an individual is willing to take.  This is measured by conducting a risk questionnaire to establish the individuals risk profile.  Investing over longer periods of time in a diversified portfolio can help control the levels of volatility and risk that are associated with investing in funds and markets. To view more on Investment Advisory Service click here.

6. Create a Contingency Fund

It is always prudent to create a contingency fund for emergencies; we suggest a contingency pot worth at least six months’ of expenditure.

If you have any queries or would like to discuss how you can put in place a financial plan to protect you and your family, please contact us on  01 2375500 or email justask@harvestfinancial.ie.