7 Steps to Setting Your Financial Goals in 2020
- Where are you now?
- Set a Budget and Stick To It
- Speak to a Professional
- Plan For Retirement
- Stay Organised
- Establish An Emergency Fund
- Review Current Investments
One of the most popular things we review heading into the New Year is our finances. Whether it’s setting a savings goal, identifying new investment opportunities or simply taking the opportunity to review the performance of current assets, a new year always feels like a fresh start and a great time to lay down some objectives for the future.
If you’re heading into the new year and thinking about ‘new year, new me’, why not actually take the first steps to completely transforming your financial future? Whether you’re looking to build security for later life, create a nest-egg for your family, want a holiday home in your favourite getaway or you’re adding to a current portfolio, we believe that having clear, actionable plans in place is the best way to find success as an investor.
This is why we’ve built our ‘seven steps to setting your financial goals’ for 2020. What follows is a brief overview of the steps themselves, as well as insights from industry experts on the importance of setting realistic goals early.
Where Are You Now?
The most important part of any plan is the preparation. Understanding the finances and assets you have available to you currently is vital, especially before you start setting long-term goals. For investors especially, knowing where you stand is important to ensure you can find the optimum investment to fit your strategy, needs and budget.
According to Laura Thursfield, an Independent Financial Advisors with Mazars, when you’re setting your goals it’s vital that your investment fits into your present and future plans: “Before I can tell someone what the optimum investment is, we need to take a look at what they’ve currently got and make sure that investment fits into their circumstances now and then what their objectives are in five or ten years time. The starting point is what do you have now, the second point is where do you want to get to and then my job is to bring the two together with a recommendation.”
Set a Budget and Stick To It
At this point in your planning, understanding your budget is vital. A trap that many investors fall into is having an inflated view of the income that their asset base can produce, especially once they stop bringing in a regular salary. This typically leads to setting unrealistic goals and in the long-term and the failure to meet them.
A more realistic way of working is to break down the amount of money you need and the lifestyle you want and then marry the two together. This leads to a much more realistic picture of what life could look like during retirement.
Just remember to be flexible. Goals can change at a moment’s notice and it’s important that your entire financial plan is flexible enough to meet those changing objectives.
Speak to a Professional
While this step can be more useful for some investors than others, ensuring you have a trusted partner on-board can be the difference between a successful investment and a relative failure.
Whether you’re speaking to an independent financial advisor such as Laura or a full-service developer such as ourselves, take the time to build out a network of professionals across all of the different aspects of the investment process.
Plan For Retirement
In the recent ‘Time to Invest’ survey that we conducted, we found that out of 1,200 people across the UK, 41% have no investments planned for the future. As living costs increase, the prospect of working longer to build a comfortable retirement is much more likely. This is why many people turn to investments to support later life – whether it’s a pension, property, stocks or ISA.
When you’re setting your financial goals, thinking long-term is just as important as the short-term. Any movements you make now can have an incredible impact on your pension pot for the future. Also consider that by investing now, there is more opportunity for building a solid, diverse portfolio that can deliver much more than relying solely on a pension.
Having additional investments can provide compound returns and, depending on when the investment is made, can deliver passive income over longer periods of time, freeing up capital to re-invest, supplement a pension pot or simply enjoy.
This is where a ‘ready-made’ investment can make a huge difference in the long-term. A unique type of property investment, ‘ready-made’ typically means that the property is pre-let and ready to start delivering immediate benefits. In terms of building consistent returns over the long-term, this is ideal, allowing investors to take advantage of current market conditions and maximising returns.
Regardless of the size and scope of your objectives or investment portfolio, ensuring proper due diligence from the outset of any purchase is vital. Staying organised will ensure that you maintain a focus on your future objectives, which can be made easier by setting SMART goals – specific, measurable, achievable, realistic and timely.
You’ll want to set goals that fit all of the criteria above. By doing this, you’ll naturally focus your efforts and increase the chances of being successful going forward.
During the planning and investment process you’ll want to stay on top of your cash flow, your investment location (in the case of property) and general market trends. These can all affect an investment and organisation is vital for keeping each of these aspects in check.
Establish An Emergency Fund
Ask any seasoned investor about preparation and many will advise the creation of an ‘emergency fund’ first. Having a spare pot of money is always a good way of mitigating any unforeseen challenges. If something goes wrong, having a financial safety net is incredible useful. In terms of property, an emergency fund can help mitigate void periods. As dangerous as rent arrears, void periods are instances where the property is empty and not generating income.
Consider having to pay mortgage repayments on a property you’ve invested in because you cannot find a tenant. Now consider that amplified across a portfolio. Having a ‘rainy-day’ fund can mitigate challenges associated with void periods, ensuring that damage to your overall investment is kept to a minimum.
Fortunately, by having a tenant in-situ from the outset, many ready-made investments offer the opportunity to avoid early initial void periods.
Review Current Investments
Reviewing your investments is a vital part of finalising your financial goals. Once the above measures are in place, you’ll be in a good place to examine what assets you have available to you and how they can help support your objectives.
Whether you’re reviewing a portfolio or identifying new opportunities, take the time to see how these investments fit into your current circumstances. A ready-made investment, for example, is ideal for delivering immediate gains in the short-term but is naturally geared towards building long-term returns and can be a great option for those that want to implement more property investments.
If you’re looking to set a new year, new investment goal for 2020 and property plays a role, New Eton House in Slough is designed to be a hassle-free investment opportunity. Completing in Q1 2020, New Eton House is a brand-new conversion that features modern specifications and features, is completely pre-let and ready to start delivering immediate rental income.
As we enter the new near and a new decade, New Eton House is ready to help you achieve the long-term financial goals that you want to achieve.