Include happiness and goal setting into your wealth preservation

By Daphne Rampersad, Investment Advice Lead at Liberty

Daphne Rampersad

When it comes to financial planning, many people focus solely on wealth creation instead of what is needed to maintain the life we might want for ourselves and our loved ones. When it comes to wealth preservation, decisions and planning often take a back seat to wealth generation, when they are equally important. 

The importance of taking a holistic approach when it comes to financial planning

Holistic financial planning is looking at the big picture and encompassing important components when it comes to your personal and financial life. Holistic financial planning considers your goals, your dreams, where you are now and where you need to be, and how you are going to get there.

It is important to view wealth preservation as an important component of this comprehensive financial planning, and there is a need to attach goals to your investment, retirement and savings strategies.

A financial road map or framework can encompass how to get you there

Once such framework would list your assets as business assets, lifestyle assets, wealth preservation assets and surplus assets. Simply put, your business assets are those that provide you with your income, your salary, or what is generated from your business or your practice.

Lifestyle assets are those that enable you to sustain your lifestyle and include your permanent home, possible holiday homes and vehicles. Reducing the short and long-term debt associated with these assets should be a priority.

Wealth preservation assets are those assets that come into play when your business assets no longer contribute. What wealth protection and preservation does, is fill up your bucket. When your business and lifestyle assets begin to deplete, this is when your wealth preservation assets should kick in.

This includes provisions made to look after your loved ones after you die, estate planning and having a signed and dated will, and critical illness cover and income replacement. These are important factors in holistic financial planning and can provide much-needed peace of mind for you and your family.

Last within this financial framework are surplus assets, which are possibly more relevant to higher net individuals, and are those assets you can speculate with. This is money you can afford to lose, the money you can risk or money you would like other people to benefit from, such as a charity or a trust.  

Goals and maintaining a certain standard of life have become investment priorities for many. Financial advisors, on the whole, are moving away from assessing if clients have enough to be financially secure to assessing whether they will be happy. Happiness is being recognised as a key factor to not only survive but to thrive.

Three key trends that drive happiness

Key trends that drive happiness include having meaningful relationships, especially for those over the age of 50. In fact, this is the single biggest factor that determines your life expectancy. Other trends include rewarding experiences and a sense of purpose. Factoring in the drivers to happiness also plays a part in planning and securing your wealth goals.

The question is, how do you bring these complex elements of holistic financial planning together?

Herein comes the importance of a credible financial adviser, someone who understands your unique goals and challenges and is able to advise and manage all these facets holistically.

It is crucial when finding a financial adviser to ask about their certifications and qualifications, to ask more about the type of clients they work with and what their measurement of success is. 

The bottom line is that life changes and we survive, thrive and adapt. This is also how we should think about our financial planning. It needs to be flexible enough to change as life events happen and be planned in a way that unexpected life events don’t disrupt our goals.

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