1 Set your long-term goal
When it comes to investing, as in so many other matters, most people focus on the present rather than
on their future needs. Yet the key to well-informed decision-making is to begin with the end in mind,
and to be clear on what you are trying to achieve. This will inform what you need to do today and
whether this target is realistic.
For a pension scheme, the target would be meeting all of its commitments. For individuals, it could be
to accumulate enough assets to provide a desired level of income in retirement. Once you are clear
on the end goal, you can work backwards to calculate how much to save, and decide the right
investment strategy, taking advantage of available tax incentives.
2 Take the right risks
at the right time
Managing risk is of fundamental
importance in achieving your financial
goals. It is a careful balancing act. Not
taking enough risk in the beginning and
middle stages of your investment journey
is as bad as taking too much at the end.
Typically, the further from the end you are,
the greater your potential risk tolerance.
It doesn’t matter if markets have a bad
year next year if you have 10 to 15 years
to invest before reaching your retirement
age. Hence the beginning and middle
stages are opportunities to grow your
wealth by taking more risk to potentially
enhance your investment returns. As you
approach the end stage, protecting
your accumulated wealth is as important
to meeting your goal as investing for
future growth. This is where advice is so
important.
3 Start early
“The most powerful force in the
universe is compound interest”
– Albert Einstein
More than anything else, the key to securing
your financial future and meeting your goals is to
start early. The power of compounding potential
investment returns can be incredibly rewarding over
the long term.
While the end goal may appear daunting, starting
early and saving often is the foundation to long-term
wealth. It’s the same as learning a new skill; little
things done often, and well, create extraordinary
results. Pension contributions should be seen as a
necessary expense, an integral part of household
budgeting. They should not be an afterthought.
Saving for retirement is undoubtably harder than it
used to be, but with careful planning it is still possible
to achieve your retirement goals. Plan ahead, start
early, make appropriate risk decisions and seek out
trusted advice.
To receive a complimentary guide covering wealth management,
retirement planning or Inheritance planning please contact Paul
Brady on 0121 355 2473 or email [email protected]
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