What do Civil Defence and Financial Planning have in common?
by Bruce Cameron
New Zealand is a country of natural beauty enjoyed by citizens and visitors to our country. With extreme weather events seemingly happening more often around our country, how do we prepare for the unexpected disruptions to our lives when they happen? Here’s some points for your consideration.
Some things to note about Civil Defence include:
1. Understanding the risks of the event.
2. Have a plan in place to prevent damage and loss of life.
3. Implementing the plan when weather, earthquake or floods determine a prudent course of action, through the various agencies.
4. Visit the Civil Defence website to understand more about what to do in a disaster. https://www.civildefence.govt.nz/
So, what does Financial Planning have in common with Civil Defence?
Given the sudden and unexpected nature of natural disasters, at first not many similarities may come to mind, but on examination here are some of the common themes I observed.
As above, I would suggest a financial plan has the following attributes:
1. Understand the financial risks of an insurable life event, whether for property or health.
2. Have a personalised plan in place to prevent damage, protect wealth and minimises financial loss due to uncontrollable life events such as accident or illness.
3. Implement the plan and review regularly. When did you last review your financial plan - or your Wills and Enduring Powers of Attorney (estate planning) for personal injury or untimely death due to changes in your life circumstances?
4. In other words: Plan and be prepared.
Some further questions for readers to consider are noted below:
1. When did you last consciously make time to review the financial risks to your life, family, business, and work interests to protect your own health (families) and life plans for the next 12 months and beyond?
2. Do you have the correct fire and general insurance to replace loss to physical assets? Are things the same value or greater value?
3. Do you have the correct health cover to access medical treatment for an unexpected diagnosis requiring an operation?
4. What protection do you have for your income earning ability for the next decade? Even a modest income of $25,000 p.a. multiplied by 10 years is $250,000 of unearned pre-tax income. If you do not have a suitable policy in place for illness, how would you manage your daily life?
5. Legislation and bank lending policy often changes; this may impact your plans if you want to sell your home and buy another one. Would there be a funding gap?
6. Should you maintain a balanced investment / KiwiSaver portfolio in retirement?
7. What is the difference between a balanced investment portfolio, compared to a growth portfolio? Why are these matters important to review?
Here at Compound Wealth as advisers we like to assist you, our clients, to manage and arrange your financial affairs to meet your goals and aspirations. Helping you identify gaps in your thinking and/or planning using our collective experience to assist you in your goals and life choices is part of our service and approach to financial planning.
Research in New Zealand from two leading professional bodies, the Financial Services Council and Financial Advice NZ, has shown people with financial advice experience less stress and have the potential of more productive and happier lives. Investment returns are 4% better on average from advised New Zealanders than non-advised New Zealanders*.
“To put this 4% into real terms; if a 25-year-old were to take financial advice and saved $2,500 per year, they would be $1.5 million better off at 55 than if they didn’t take advice. That’s a remarkable difference, and a benefit that many more New Zealanders should be receiving,” said FSC chief executive Richard Klipin.
"...if a 25-year-old were to take financial advice and saved $2,500 per year, they would be $1.5 million better off at 55 than if they didn’t take advice."
We invite prospective clients to contact us to discuss their investment plans. We can then confirm if your current plan is on track to meet your lifestyle and future aspirations.
References:
https://www.fsc.org.nz/site/fsc1/Money%20and%20You%20-%20Research%20-%20Financial%20Services%20Council%20-%20August%202020.pdf Page 9.https://financialadvice.nz/wp-content/uploads/2020/10/Financial-Advice-NZ-Trust-in-Advice-Double-page.pdf Page 5.
