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Planning to leave a legacy that matters

17 September 2020 Ronald King, Head Public Policy and Regulatory Affairs at PSG Wealth

The drive to provide a good life for children or perhaps extended family is a strong incentive for many of us. In the current economy, some find themselves supporting parents, siblings, and spouses on one income or a reduced salary.

Whatever your situation, growing your own wealth through good personal finance is a worthwhile goal to focus on, especially in Heritage Month. More recently, the pandemic has also underscored the importance for a robust financial plan in helping us to weather any unexpected surprises. Here are some considerations to keep in mind if you want to build a financial legacy to be proud of.

Live your legacy

Putting your financial future first – or leaving a legacy, if that’s your aim – means finding the balance between spending and saving. Living beyond your means will derail any hope you have of building financial security, so an important first step is developing your budget and allocating a portion of this to ensuring your future financial security.

Your savings, from short-term to retirement, all work towards supporting you as you grow older. Shorter term savings like an emergency fund or savings aimed at a specific short term goal (like a holiday) can help to help manage the risk of having to go into debt to meet unplanned expenses, and can allow you to embrace opportunities as they arise, without breaking the bank. Remember even small regular contributions can grow to meaningful money, if given enough care and time.

The financial plan to match

The way to wealth is paved with patience and a proper plan. Your needs should be considered holistically, and any gaps addressed. A qualified financial adviser can help you work out what you need, and how to achieve your goals. Remember that while we often focus on building an impressive portfolio of assets, short-term and long-term insurance, and medical cover, all have a role to play, as these provide a financial safety net for the asset your accumulate during your lifetime, and also help to secure your ability to earn an income and maintain your health. Better safe than sorry with the right policies in place, should something unexpected get in the way. If you are supporting loved ones, getting all of this right has even greater importance. Don’t neglect your estate planning. While accumulating your wealth along the way is important, remember that you need to ensure your assets are distributed as you had intended, and this plan is best put in place earlier rather than later.

The end goal in mind

The longer you can save, with exposure to the right investment growth, the better your chances of building up sustainable wealth, to take you to, and through, your golden years. As a long-term investor, your focus should be on beating inflation in the long run, and this means you’ll need to consider allocating a portion of your portfolio to riskier assets, like shares. Remember that even once you have retired, you probably still have an investment horizon of thirty or more years ahead of you. You are more likely to stay the course, and ride out the inevitable ups and downs of the stock market, if you can take comfort from the fact that your investment is suitably diversified. This not only means that you should invest in a blend of different asset classes (cash, bonds, property and shares) but also internationally. Once your portfolio is suitably allocated, your biggest challenge will probably be leaving it alone to grow over time, and not to make any ill-advised changes when volatile markets cause too much discomfort. Research has shown time and again investor behaviour is far more likely to undermine wealth accumulation rather than the volatility of the markets themselves, and this is precisely why the unemotional counsel of a financial adviser can prove to be your biggest asset.

Whether your objective is to secure your own legacy to enjoy while you are still alive, or to ensure your wealth can go the distance and provide for the next generation too, it’s best to remember it all starts off with a well-structured plan.

Quick Polls

QUESTION

Which of the following factors will make the biggest difference to the profitability of a short-term insurance brokerage over the next five years?

ANSWER

Implementing tech-backed distribution platforms
Diversifying into specialist risk management & risk advisory services
Renewing focus on the broker-client relationships
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