Financial Plan

Financial Plan

Our previous piece explained why in uncertain times you should leave investment portfolio alone, and historically we’ve seen a strong rally from global markets. Whilst there may be more downside to come, we know that investors who miss out on large movements such as these, see their long-term returns diminished.

When most people think “Financial Plan”, they just think investment strategy, and even for most financial advisers, wealth managers, IFAs (whatever the name) that is what it amounts to.

Of course, a well thought out financial plan should be accompanied by a sensible investment policy, but the plan should come before the portfolio. An evidence-based, low cost, robust investment portfolio is just one piece of the planning jigsaw that enables us to see the whole picture and step two in our guide was to review or, if needed, create your plan.

Working with a financial planner in Hong Kong can really help you to make the most of the opportunity for which most people move here. All too often people leave with little or nothing more than they arrived with.

A true financial plan will be an evergreen – living and breathing – document, which should be constantly reviewed as you move through each stage of life, created by establishing your goals and aspirations and working back from there.

What do you want to achieve with your money?

The first step you should take when creating your plan is to identify where you want your plan to take you. Most people will have short, medium- and long-term goals around which their plan needs to be moulded.

  • How long could you maintain your current standard of living if your income were lost?
  • Do you have an emergency fund built up and stashed away for a rainy day?
  • How are you saving money – do you have a disciplined saving and investment strategy?
  • Where do you see yourself living in 5, 10, 15, 20 years’ time and in what property?
  • Where and when do you want to retire and how much do you want to spend?
  • Each of these goals may entail a slightly different strategy.

Where are we now?

Once your goals are established, you should review your current situation. What assets do you currently own, what savings do you have, how is your income expected to change over the next few years?

At Private Capital we are big advocates of using Cash Flow planning as an integral part of the Financial planning process.

This video explains more

Cash flow planning considers your current asset base, assigns value to future expenditure and income streams, and allows us to work backwards and identify any gaps; Are you allocating enough of your income to savings? Are you taking on enough risk or too much risk in your investment portfolios? Will you be able to retire at the age you desire?

Ultimately, if you continue on your current course, are you on track to meet the goals you’ve laid out? If not, what changes do you need to make to create a more positive outcome?

Expect the unexpected

Once you know where you are now, where you want to go, and have some idea of the route you need to take, the final thing to consider is those events/unforeseen circumstances not shown on the map. As well as the markets, life is also unpredictable, so your plan needs to have some contingency measures.

A good financial planner should be able to consider the information gleaned from the previous steps, and help to make logical asset allocation decisions; We have the plan, how should we construct our portfolio so that we have the best chance of it coming to fruition, regardless of what obstacles may find their way onto our path?

Keep it Organic

Your financial plan serves a variety of functions, connecting your short, medium- and long-term goals, and making you feel comfortable along the way.

No plan can prepare you for absolutely everything, you can’t foresee every possible outcome, your plan changes and evolves with you.

We certainly find that for our clients, financial plans are never truly finished. If you need help with yours then get in touch.


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