MoneySkills with Nelson Letshwene

Money & the psychology of money

Financial Planning Beyond 2015

The Future Beckons

The only way to have a bright future is to get involved with it now. Getting involved with your future means including it in your present. A bright future will not happen just because you wish it to happen. It will only happen if you make it happen today. The real question is, what can I do today, to make sure that my financial future happens as I dream it to be?
The basics are very clear. A person who wishes to retire rich or comfortably, needs to make sure they are stashing enough aside today, towards their retirement. I have met a lot of people whose employers are contributing towards their pensions, but they themselves are either not contributing anything, or very little. The government wants to encourage everyone to contribute towards their pensions by making up to 15% of your personal contributions tax-deductible. If you want to reduce your tax, contribute up to 15% of your money towards pension or Retirement policy. Going forward, what is your overall retirement strategy beyond 2015? Think about it now and include it in your future plan.
Let’s think about special projects beyond 2015. When people do their New Year resolutions, there are often projects that they would like to accomplish. Understand that more often than not, each project must have a budget to be fulfilled. Calculate a realistic budget for the project. Decide how you are going to finance that project. Will it be borrowed money, or your savings, or money you are still to make? Each one of these methodologies have their pros and cons. Weigh them carefully before your proceed.
Let’s now think about your investments in 2015 and beyond. Investing for the future requires meticulous planning. If you don’t plan your investments, they will not happen on their own. There are various investment systems and the first thing you need to do is choose the classes of investments that you need to follow. Investment systems include real estate investing, stock market investing, business investing, or using fund managers to grow your money.
Whichever you choose from the list above, make sure that your plan is clear, and not just a wish. If you plan to invest in real estate, for example, be clear about what should happen in 2015. Is this the year that you buy land, or develop your current land, or save a deposit for new property, or get financing for investment property. Set deadlines and action plans.
If you plan to use investment funds, do your homework about which investment funds to choose from. Who are the investment managers and what is their track records? Will you choose local funds or offshore funds? What is your diversification strategy?
If you will include any DIY investing like managing your own stock portfolio, what are your targets and what will the composition of your portfolio be like? What is the investment strategy that you will follow throughout 2015 and beyond?
In your planning for the future, don’t forget about your current ongoing life. It will also require money from you. School fees will still have to be paid. Current commitments will still need to be honoured. What are some shifts you have to implement in order to incorporate your new plans? People who are not willing to do some shifts, may be stuck with current commitments. These exert pressure because they demand attention now. The future is often left out because it does not exert pressure. It will only happen if you are willing to do some shifts.

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This entry was posted on January 6, 2015 by in Financial Planning and tagged , , , , , .

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