With 2009 shaping up to be a financially challenging year it is important to take the time to review your financial position.
Assessing your financial position can be done in isolation, but enlisting the help of a financial adviser can be extremely valuable. Not only are they familiar with your personal situation, but they generally have access to information and tools that you don't. It's also very likely that they have experience and skills in many areas of financial planning that you will find useful in navigating through a potentially challenging year.
Meeting your objectives
Calculating whether your investments will still meet your objectives is very difficult. Fortunately, most financial advisers have sophisticated models and calculators at their disposal. These can be extremely useful in developing scenarios based on numerous assumptions. You should consider speaking with an adviser before making any decisions to withdraw or switch your investments into cash. Switching to cash may make you feel a bit better, but when you compare the likely future returns from cash versus inflation, you may find yourself in a worse position. An adviser can assist you in assessing a number of options and weighing up the pros and cons for each. They can also review your objectives and look at the best strategies to reach these going forward.
Stress test your cash flow
If the Australian economy takes another turn for the worse, unemployment is likely to rise, so ensuring you can make ends meet is vitally important. A financial adviser can work through any potential problem areas with you, and make recommendations on what steps you can take to insulate your family. Unemployment and loss of income are the most obvious threats, but unforeseen events such as illnesses or accidents can also have a major effect. One of the biggest cash flow issues facing Australians is our debt position. A financial adviser can help you with suggestions on how to reduce your debts as painlessly as possible.
Smart savings
Whilst not all financial advisers are tax experts, their education and training should mean that they are knowledgeable about many areas where you can save tax. Many clients have saved thousands of dollars a year by increasing super contributions.
Financial advisers can also analyse your insurance needs and level of cover. If you don't have appropriate death and disability insurance, you could be gambling with your family's financial future. On the other hand, if you have few debts and no dependants, maybe you don't need as much insurance as you currently have. In practice, you may not realise how much insurance you have and how much it's costing, so road testing your insurance policies with an adviser could save you money.
In the current economic situation, reviewing your financial objectives and strategies is more important than ever. Talking with a trained professional and working through options and opportunities could prove extremely valuable.
Source: www.yahoo.com.au
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