Here are the top four tips – make sure they are in place first.
1. Understand risk and return. The yield that an investment generates is the starting point. Don’t take additional risk without being rewarded by additional return. The most effective way to reduce risk is to diversify – across asset classes, managers and regions. An investment that generates a loss with the expectation of potential future growth is speculating. Don’t confuse the two.
2. Insure your income, assets and life. “We’ll get by” or “she’ll be right mate” won’t cut it with the spouse and kids left behind who have to sell the family home. Unless you can live comfortably without working and you don’t need to generate an income, this is essential to protect your assets and loved ones.
3. Have a cash buffer. Stay liquid and have a cash buffer to cope with the unexpected. This may be for unexpected buying opportunities or unexpected personal circumstances but gives additional flexibility. The amount will be different for everyone.
4. Get your estate planning in order. If you want your assets and wealth to end up in the right hands at the right time, you need to have a comprehensive estate plan in place. So who needs one? Anyone with either assets or loved ones. And that is before we even consider second marriages, step kids, ex spouses, spendthrift kids, “interesting” family members etc
BD Financial planning is able to refer you to one of our Professional Partners who can discuss your estate planning needs.