Financial planning is, by its nature, forward-looking. What counts is where you are now and what you do in the coming months and years. That said; there’s good reason to pause and take a look over your shoulder to see how far you’ve come. Why? Because taking stock of what you have achieved so far can spur you on to even greater things in the future.
Aside from congratulating yourself for having the sense to take advice and work to a plan, pausing for a look at where you’ve come from also provides an opportunity to review your current circumstances. Even the best of plans need some tweaking to make sure they are optimised for the next few years.
Don’t have a financial plan? In that case it’s well worth looking at what you may have missed out on, and making a resolution to do something about it.
Has compounding been working for you?
Much of our future financial security relies on regular savings coupled with the power of compound interest. For example, if you’d set up a savings plan five years ago with an initial deposit of $10,000 plus weekly contributions of just $100, and assuming an after-tax return of 6% per year, by now you will have earned $7,797 in interest.
Underwhelmed? If you’d had that same savings plan running for 20 years, the interest earned is a more impressive $120,056, more than doubling the amount of money you invested. Keep going and the interest component will continue to accelerate.
Maybe you’ve done better than that, upping your savings as your income has increased. But if instead you’re thinking about what might have been, remember that the sooner you start the sooner you’ll reap the rewards.
Are you protected?
A financial plan is about more than savings. Protecting what you have is critical to your family’s security. Over the years have you enjoyed the peace of mind of knowing that your loved ones would have been financially stable if you had died or been unable to work? Now may be the time to review personal life insurances. As children become independent and savings grow, you may find yourself paying for cover you don’t really need. But if your family is growing or you have taken on more debt, maybe your life insurance needs a boost.
Where to from here?
So how do you feel as you look back at the past five, ten or twenty years? Can you give yourself a pat on the back, or do you feel like giving yourself a kick in the pants? Are you glad you took advice, or regretting that you didn’t?
Whether it’s time for a review and a tweak or laying the foundation stones of a brand new plan, your licensed financial adviser is ideally placed to help you make the most of the coming years and decades.