Taking a holistic view is key to successful financial planning

It is a fairly cliched saying, but you really shouldn’t “put all your eggs in one basket”.

During times of volatility and uncertainty, having a wide and diversified spread of investments, savings and assets is often the best approach to minimise risk to your overall wealth.

If you were to only invest your money into one type of asset, say property, then if property values or rental yields were to fall you put all your money at risk.

Similarly, if you were to rely only on traditional savings accounts, you would be at the will of the markets and interest rates.

Even where you don’t lose money, by failing to diversify you could lose out on opportunities from other forms of investment.

Your financial plan is also likely to change over time, as your ambitions and appetite for risk change.

That is why it is best to take a holistic view when it comes to creating a successful financial plan.

What is holistic financial planning?

Instead of solely focusing on one form of investment for a single purpose, for example saving to buy a luxury car, a holistic financial plan considers every element of your personal and financial life.

This would include your current and future goals, so as to develop a plan that helps you achieve your aspirations by ensuring you are saving money, reducing the taxes that you pay, improving your returns on investments and protecting your wealth.

Where to start?

The first thing to consider is your financial goals. This is your ultimate set of objectives that guide your decisions in life.

This could include early retirement, being mortgage and debt-free by a certain age or having more freedom and the finances to travel. Everyone’s goal is likely to be different.

The next step is understanding where you are now. This is why you should conduct a check-up on your finances, which looks into your current assets, investments, pensions, savings, insurance and all of the other elements that build up a picture of your wealth.

Once you know where you are and where you want to be, you can plan the journey to get there. There are many tactics to achieve this, but ultimately, they should look at:

  • Increasing your investment return
  • Helping you save more
  • Protecting you, your family and your assets
  • Minimising your investment costs
  • Reducing the amount of tax that you pay.

In a volatile economic market, they should also help to keep your money safe by not exposing you to unnecessary risk, while maintaining the flexibility to adapt as events change.

Seeking independent financial advice is critical to achieving a harmonised, holistic plan that meets your specific needs

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Posted in IFA News.