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Should You Have a Professional Prepare Your Financial Plan?

At one time, the majority of individuals who took advantage of professionally prepared financial plans were ones with extremely healthy bank accounts.  Today, that is no longer the situation.

The reason?  Some people realize that without a financial plan, they have little knowledge as to where their finances are heading.  With one, they have a firmer grasp concerning their monetary future (and the types of things they need to do to stay on course).  By and large, financial plans make perfect financial sense.

So, will everyone’s plan look same?

No.  There are many variables that go in to organizing a well-prepared financial plan.  Here are some of the types of questions that will need to be answered.

  • What are your financial goals?  This is a pivotal question and often shapes the way the plan is devised.
  • What kind of retirement lifestyle are you seeking?  For example, do you want a pricey home in a gated community?  Perhaps you plan to stay in your current home or apartment?
  • Do your resources match your desires?  Some individuals have pie-in-the-sky dreams, but they do not have the money to back them up.
  • Are you willing to take on risk for the potential of a higher return?  For instance, certain people are willing to risk losing a chunk of their investment if it means the opportunity for impressive growth is attainable.
  • Do you wish to focus on relatively secure investments?  A number of investors are adverse to risk and seek out more secure growth opportunities (albeit the returns are likely to be lower).
  • Are you living beyond your paycheck and/or bank account?  Sometimes unforeseen events can cause people to borrow from Peter to pay Paul.  Others have champagne taste with an apple cider wallet.
  • How much money can you realistically afford to invest?  Sometimes individuals believe they have more money than they do.  On the other hand, others have impressive resources but are not fully capitalizing on what is available.
  • Do you want to diversify investments?  Certified Financial Planners generally assert that diversification minimizes risk, but that is something you and your financial advisor should decide.
  • Are you appropriately insured?  The right amount of insurance protects your loved ones from unforeseen events.
  • Could you be saving more than you do?  Some individuals spend more than they should (when they could be tucking additional monies away).
  • Who will get your investments?  Many investors have a clear idea where they would like their money to go when they pass on: it is important to make these wishes known.

Naturally, a financial plan cannot put money into investments without available capital, but it can help you wisely chart the money you do have.

For additional information about financial planning, contact an experienced Certified Financial Planner (CFP).  For a list of licensed planners in your area, go to www.cfp.net.

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