City thinking, local knowledge

New year, new review: Why it’s important to review your plan

By Questa Chartered

As we enter a new decade, we wanted to highlight the importance of reviewing your financial plan. We know that financial planning isn’t a one off exercise. Your life and financial situation will inevitably change as time goes on, so you need to make sure that your financial plan is refreshed to reflect any of these changes. Staying up to date means you can keep your plan realistic and manage any expectations. 

Here are some questions to ask yourself periodically so you can have a realistic outlook on your financial plan:

How do I feel about risk?

As time goes by, your appetite for risk will change as your investment knowledge improves or as your finances grow. Reassessing your aversion towards risk can help you to better frame your financial plan. Those closer to retirement may want more reassurance and less volatility, whereas younger investors may be comfortable with taking on more risk for the chance of higher rewards. Your financial planner can reallocate assets and rebalance your portfolio to reflect any shifts in your attitude towards risk. 

Has my tax status changed? 

You may have changed income tax bands, so it’s important to make sure you factor this in. If you’re wanting to generate some extra income by selling off any of your assets such as a second property or vehicle, you need to forecast the impact of Capital Gains Tax. 

What are my emergency plans?

It’s important to make sure your emergency cash fund is topped up. The general rule of thumb is to have three months of income in there for a rainy day. Are there any changes to your life since you last checked? Do these changes mean that your emergency fund should be added to? 

Further to this, you need to check that your In Case of Emergency (ICE) pack is up to date, and if you don’t have one, then make sure to create one. Your ICE pack should contain all the essential documents, details and passwords for your financial accounts. If you already have one, make sure any changes are reflected.

Are my goals still achievable?

This is one of the most important factors that you should consider. When your plan was put into motion, you will have defined a select group of goals that you wanted to achieve. But with changes to your life come changes to your goals. You might want to extend or shorten the deadline date of certain goals. Have you been too cautious with certain savings targets and believe that you can put more away? Could you potentially expedite your path to retirement? 

Do I have any new expenses?

Have you released equity from your property? Have you purchased a new asset, such as a new property, that requires funds being set aside for maintenance? As your life changes, so will your expenses. Factoring any new expenditures will help you assess the achievability of your long term goals so it’s essential that you do so. 

You also need to consider any new dependants in your life. A change in marital status, a bereavement or having children can impact how you spend money. If your family grows, you should update your life insurance policy for your own peace of mind. You might have new care expenses for aging loved ones. Just make sure to be forward-thinking and keep an eye on any potential expenses that may come your way in the future. 

Has my income changed?

Hopefully as time goes on, your income will increase. Your company might become more profitable, your assets may have brought better returns than predicted, or you may have secured a promotion. Any changes in income will affect your financial goals – you may even find yourself in a better position than was previously predicted. 

How we can help 

Depending on your prior agreement with Questa, we’ll provide ongoing support and service that helps you to adapt your plan to any new changes in your life. We’re committed to ensure that you have peace of mind and financial wellbeing. If you’d like us to update your service level to contain more checks, rebalances and reallocations then make sure to contact your financial planner today. 

If you have any questions about your financial plan or if you would like to find out how Questa can help you to achieve your financial and retirement goals, feel free to get in contact today.

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