It is a misconception that only the wealthy or elderly need a financial plan. I think the case can be made that anyone who wishes to have financial success in life, meet their goals, and then retire with dignity needs a financial plan.
Yes, an individual can do a financial plan on their own. However, it reminds me of doing your healthcare on your own. Self-planning can be a legitimate option, but not something everyone can do. They may be too busy with other aspects of life to stay on top of it or to do enough research to have the knowledge necessary to create the best plan for themselves. They may not have the resources or access to what is needed, or even be aware of that. You don’t know what you don’t know.
I feel so strongly that every investor should have their own financial plan that I offer it at no charge to my clients. I like to work on the plan together in an interactive setting and have a conversation throughout the entire process. I believe clients should be educated instead of told what to do, so they have the information necessary to make the right decisions.
It is essential to list your goals and how you plan to achieve them.
An investor should know how their investments work and understand them before investing in them. I do not recommend having a plan for you that you do not understand and investments that are not understood.
Your financial plan should be reviewed annually and updated as life changes occur.
A good financial plan can help you escape debt and stay that way. A good financial plan can help you understand how much life insurance you should have and how long. For example, a sound financial plan can help you decide when to start taking your Social Security.
Lack of education and understanding of simple things like the rule of 72 and its impact on your retirement portfolio can be detrimental to your final retirement results. Unfortunately, I meet with people who have not done any planning and are nearing retirement, and their mistakes have significantly decreased their ability to retire comfortably. I would encourage everyone to start planning as soon as possible. I like to think of a financial plan as a road trip with a specific destination, and you would not just start driving without knowing the best route and having some idea of when you plan to arrive. You also need to be aware of challenges along the way.
I would recommend finding an advisor who has the heart of a teacher, who has your best interest in mind, who is transparent with their fees, and with whom you are comfortable.
The right advice can lead to a much more comfortable and stress-free retirement. The goal should be financial peace.