If you want to be financially successful in life or achieve financial independence, one of the best things you can do is to create a long-term financial plan. Long-term financial plans can help to guide your short-term decision-making and help you focus on the big picture and working toward larger goals.
To develop a long-term financial plan, there are a few tips we recommend from Capstone Financial Planning you should be sure to follow. Some tips for creating a plan include:
Determine Your Needs
If you’re developing a long-term financial plan, then it’s important to consider not only your immediate needs but your long-term financial needs as well. These needs will help to guide your strategy for reaching your long-term goals. For example, are you investing to grow a portfolio or start developing passive income that can sustain you in retirement?
You also need to decide how much risk you’re willing to tolerate in your investments. Decide early on whether you’re willing to tolerate greater volatility in your investments to have the chance for higher growth. If not, then you’ll need to adjust your strategy and maybe your goals.
Choose an Advisor to Help You
When constructing a long-term financial plan for your life, it’s important to have the right help. You’ll need someone who understands how investments and financial planning works and how to build a long-term financial plan that will help you to reach your goals. You also need someone who can help you through major life events.
To fill these needs, be sure to work with a suitably qualified financial advisor who’s right for you. Find someone who’s knowledgeable about financial markets, investing, retirement planning, saving and budgeting, and most importantly someone who’s going to work in your best interests first and foremost.
As you’re considering financial advisors and deciding on investments to use as part of your financial plan, make sure to make cost a consideration in your decision-making. The costs of investing can be significant over time, so it’s important to be sure you work with a provider who has the right cost structure for your financial strategy. Some financial advisors charge a transparent fee-for-service while others may receive commissions from product providers (or a combination of the two).
All of these are important things to consider when creating a long-term financial plan for your life. However, one of the most important things that you can do to assure the success of your long-term financial plan is to get started early. This is due to the impact of compound interest – the ability to earn money in early years and then earn even more money on those earnings later on. If you truly want to build a long-term financial plan that’s successful over the long-term, be sure to get started as early as you can.
Steven McMeechan is a strategic marketing and communications specialist with over twenty years’ experience in senior marketing management roles across a range of industries including Information Technology and Financial Services. He works for Capstone Financial Planning and lives in Melbourne Australia.