Whether this is just a bit of helpful info or confirmation you’re already doing the right thing. We’ve got 5 tips that could help your financial planning. Whatever the expertise you have – or haven’t, as the case may be.
Baby steps – Know your self/situation.
For way too many of us, we just have a ‘feel’ of our finances: How much money we’ve got in the bank. Roughly what’s likely to be left come next pay-day… Unfortunately, not having a clear idea of your situation, good or bad, is what could be holding you back. Knowing exactly (or as close as you can to) what your ins and outs are, each month, will always help. It can provide clearer targets and timelines for your ambitions. Knowing how close you could be to your goals – with just a few steps in the right number or months, can be key to finding motivation.
Entry-level – get debt-free ASAP
There used to be a saying in finance saying – “Never have a pound of savings if you have a penny’s worth of debt”. What this means is that the rate you pay interest for debts and loans is always much, much higher than you’ll get for any of your savings. Now, there are some exceptions to this rule, and the banks certainly don’t live by it themselves! However, it is simply good practice to assume that any debts, no matter how small, are a cost worth losing, especially if you have any plans to invest in the future.
Amateur hour – assume that your bank isn’t giving you the best deal
Banks have a speciality in their presence on the high-street. There used to be something reassuring to people about being able to discuss financial matters face-to-face. However, beyond their status as monopoly leaders they’ve consistently proven to be poor at providing competitive deals for their customers. Let’s not even go into some of their well known misdeeds over time regarding mis-selling etc… So spend that bit more time looking on websites for better rates on your credit cards, savings accounts and ISAs. Moving around might make just you that little extra few % by the end of the year. It might be your most profitable couple of hours of your whole year.
Semi-pro – always hedge and manage the risk
Portfolio diversification is just a fancy term for spreading your risk around. Hedging your bets and not putting all your eggs in one basket… It’s such accepted common sense there’s a million different ways to put it. But the point is to do your best never to be overly exposed to one market. Pensions and other long term investments promise to do this all for you but aren’t always what you need for instant-access cash. By just keeping your fingers in a few different pies (another one!) you’ll help to protect against a sudden change in market direction taking all your investment with it. So if you’re already big on tech stocks and crypto, consider doing something very different with the next half of your funds – Agriculture and Natural resources.
Pro – Elon who?
So you’ve climbed the mountain already. Surveyed and savoured the victories of your maturing investments. What’s next? The dream of a passive income and being so well invested that you make money in your sleep is one a lot of us have, for sure. But the reality is that it’s not a goal anyone should bank on. But if you’re satisfied with the returns you’re getting from investment and not looking to double down for the thrill of losing it all – maybe try to do something good with it. Not as ‘radical’ as you might think given the huge growth in the ESG markets over the last few years. Decide what’s important to you and your world and begin investing in products and markets with ethical performance and sustainability at its core.