Why it's time to review your financial goals & portfolio
As we enter a new financial year, it's a good time to review your investments & set yourself up to meet your 2020-21 goals.
Your investment portfolio should never be set & forget.
In uncertain economic times, it's especially important to review your investments, to ensure you're well positioned to meet your financial goals, in the months & years ahead. If it's been a year or longer since you did so, now is a good time to touch base with your financial adviser to see how you're travelling and whether you need to revise your investment strategy for the 2020-21 financial year.
Understanding how to evaluate your financial position can help you have a more meaningful & informed conversation with your Newcastle financial adviser.
Reviewing your risk profile
Working out whether your portfolio is well balanced & likely to meet your investment objectives starts with examining your personal 'risk profile'. This term refers to your capacity & personal views about weathering the financial risk associated with every form of investment, from term deposits to highly speculative technology start ups.
Your age, stage in life, current financial position & your level of comfort with risk will have a major influence on how much risk is appropriate for you. If you're in your peak earning years & looking to spend another decade or two in the workforce, your Newcastle financial planner may suggest that it's more appropriate to invest in higher risk assets which have the potential to provide you with higher returns or greater capital growth.
Conversely, if you are approaching the end of your working life & have less time to ride out market fluctuations, your Newcastle financial adviser may recommend playing it safe, by focusing on lower risk investments which can allow you to preserve the value of your capital.
Re-examining your portfolio
After determining your risk tolerance, it's time to review your diversification & asset allocation strategies.
This starts with documenting all the investments in your portfolio, including property, shares, bonds, cash, managed funds & superannuation & their respective values. This gives a view of how your funds are allocated & whether it may benefit you to diversify your holdings or move some funds to an asset class which is more compatible with your risk profile.
Different types of investments perform well at different times, depending on market conditions. Having your investments spread across a range of asset classes & a range of different investment vehicles within those classes - lowers your overall risk. It means less chance of you losing a large component of your wealth, if, for example the stock market plunges, or property prices take a tumble.
Your adviser can also help you make informed decisions regarding your portfolio, appropriate to both the economic environment & your longer-term goals. Assessing your liquidity unplanned events & emergencies can happen in life & this has become a stark reality for many in recent months. If you experience such an event, it's possible you'll need access to your money at short notice. Having cash at hand, or some of your funds in liquid assets - investments which can be converted into cash quickly without a significant loss in value - can be helpful in these circumstances.
Additionally, having all your wealth tied up in illiquid assets, such as residential property, could leave you unable to access your money if a property can't be sold, or increase the risk of losing money, if you're forced to reduce the price so you can to sell up quickly. Considering your personal circumstances will help to determine the optimum liquidity level for our portfolio.
Optimising your super
For many Australians, super makes up a significant proportion of their total investment portfolio. Making sure the funds in your super account are working as hard as possible can make a big difference to your overall financial position, when the time comes to retire. Super, like any investment, requires attention to risk tolerance & asset allocation, appropriate to your stage in life. In addition to investing wisely, simply contributing as much as you can afford to super can considerably boost your retirement nest egg. Topping up your super can see your balance swell significantly & provide you with additional financial security when you reach retirement age. There can be tax advantages associated with making additional voluntary concessional contributions (effectively contributions made from your pre-tax income), up to the annual concessional contribution cap of $25,000. Concessional contributions are generally taxed at 15%, which is a rate that maybe lower than your marginal tax rate. Concessional contributions also lower your taxable income which can mean that you pay less tax.
Seeking professional advice
Investing can be complex & time consuming. Your expert Newcastle financial advisers can help you understand, step through & execute your new year checklist, helping you make the right decisions about your risk profile, asset allocation, liquidity & super.
Our Newcastle financial planners also have offices in Sydney and help clients across the local areas including Newcastle Financial Planning(Merewether financial planning, The Junction financial planning, The Hill financial planning, Bar Beach financial planning, Newcastle West financial planning, Hamilton financial planning, Adamstown financial planning, Redhead financial planning, Whitebridge financial planning, Kotara financial planning, New Lambton financial planning, Mayfield financial planning), Maitland Financial Planning (Morpeth financial planning, Lorn financial planning, Rutherford financial planning, Aberglasslyn financial planning, Metford financial planning, Beresfied financial planning), The bay (Medowie financial planning, Fern Bay financial planning, Fullerton Cove financial planning, Anna Bay financial planning, Nelson Bay financial planning, Shoal Bay financial planning, Tea Gardens financial planning, Hawks Nest financial planning), Lake Macquarie Financial Planning (Cardiff NSW financial planning, Glendale financial planning, Speers Point financial planning, Fennell Bay financial planning, Bolton Point financial planning, Coal Point financial planning, Toronto financial planning, Valentine financial planning, Belmont financial planning, Eleebana financial planning, Warners Bay financial planning, Caves Beach financial planning), Hunter Valley Financial Planning (Muswellbrook financial planning, Scone financial planning, Pokolbin financial planning, Cessnock financial planning, Singleton financial planning, Broke financial planning, Rothbury financial planning), Central Coast Financial Planning (The Entrance financial planning, Bateau Bay financial planning, Berkeley Vale financial planning, Tuggerah financial planning, Wamberal financial planning, Terrigal financial planning, Erina financial planning, Avoca financial planning, Gosford financial planning, Woy Woy financial planning, Picketts Valley financial planning) & Sydney Financial Planning (Castle Hill Financial Planning, Rouse Hill Financial Planning, Dulwich Hill financial planning).
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