There are many different types of financial planning in the world, but what exactly is wealth planning? It’s a broad term used to describe financial planning designed to meet the needs of high-net-worth individuals and families. While there are some things that apply to all wealth planning strategies, whether you’re looking to invest in hedge funds or purchase real estate as an investment property, there are also many aspects that differ from person to person and family to family.
What does wealth planning do?
A wealth planner ensures that you have proper asset allocation to reach your long-term financial goals. They will help you manage your risk so that it is manageable. Proper investment in a wealth plan means less work on your part, and more time spent doing what matters most to you.
Why wealth planning is important?
Most people don’t put much thought into their finances until an unexpected expense comes up—but many financial advisors will tell you that a little bit of planning (and foresight) can help save a lot of headaches down the road. When it comes to wealth planning, there are two main factors to consider: your asset allocation, and how much money you need on hand. A good advisor should be able to help you balance these factors with everything else in your life.
Simple steps to getting started with wealth planning
If you’re serious about long-term financial success, you’ll have to take time to set up a proper asset allocation. This simply means that you should invest your money in several different classes of assets so that you aren’t completely dependent on just one or two sources for your income. For example, if you have all of your savings invested in real estate, a large portion of it will be relatively inaccessible if something unexpected comes up like an emergency medical bill or car repair.
Where do you start when it comes to investing your money
Home, savings, or retirement? All are important financial goals—and all should be considered when you’re determining what wealth planning method is right for you. Before delving into how to properly get started with your investment strategy, it’s crucial to understand what a wealth plan truly is. So, let’s go over some financial basics that apply to any type of personal finance situation:…
Set up an emergency fund and let it sit there (investment)
An emergency fund is a savings account you’ll want to use in case of any unforeseen expenses, such as car trouble or medical bills. Experts recommend keeping an emergency fund large enough to cover all your major expenses for at least six months—and if you can’t do that, aim for three months.
Setting up an emergency fund vs. going on vacation
On one hand, your emergency fund is an essential part of financial planning. On the other hand, you haven’t taken a vacation in years. Which should you choose? If you’re torn between these two priorities, here are some questions to ask yourself: What happens if I lose my job in three months? Could I make it another three months without getting paid from my current job (and not starting a new one)? Would my savings last that long?
