Questions you should ask

Is your financial plan up to scratch? Here are some of the questions you should be asking yourself.

Questions you should ask

Johan du Toit
Thu, 08 Dec 2005


This article is a printout from
Copyright © 2000*, a division of Metropolis*

As the New Year approaches, instead of making those customary New Year resolutions — which you will probably break — rather spend some time focusing on a long term financial plan, suggests Hugh Hacking, marketing manager of the Evergreen umbrella pension funds at Old Mutual.

“The sad truth is that less than six out of a hundred South Africans can afford to retire financially secure,” says Hacking. “There are a few basic questions to ask yourself that will give you a good indication of where you stand and guide you on the most important issues to tackle first,” he says.

Take a couple of minutes and consider the following questions:

Do you have a financial plan?

You’ve heard it before: if you want something you need to set goals and make plans. The best way to develop a good financial plan is to speak to a suitably qualified and licensed financial adviser. If you already have a financial plan then you’re one important step closer to a financially sound future.

Are you saving?

Actually, the question should be “Are you saving enough?” Retirement savings will normally form the cornerstone of your long-term savings. As a rule of thumb you will need to save 15 percent of your earnings for 30 to 40 years to build up assets that will provide you with a comfortable retirement. Most of us feel too young to think about retirement. Delaying your savings will create a serious problem later.

Are your savings invested correctly?

How you invest the savings is also important. There are many different types of investments. Your goal is to achieve investment returns that beat inflation over the long term. Make sure that your retirement fund shows you what the real returns in excess of inflation are for the investments in the fund.

How often do you review your finances?

I don’t mean staring at the zeros on the ATM slip. Just as you need to service your car to keep it in top shape, so you need to service your financial plan from time to time to make sure that it will deliver the optimum results. You should schedule a date each year to review your financial plan. Perhaps you want to do it near your birthday. Whatever time you choose, you should make it a priority.

Are your retirement savings in a good retirement fund?

Make sure that your savings are going to a retirement fund that is working for you. Tick off how many of the following items apply to your retirement fund:

? You can choose an option that is right for you.
? You know what all the charges are.
? You receive regular statements.
? You can easily access your current balance and investment information.
? You are invited to education seminars that help you understand what to do.

Are you protected against the loss of your income?

So you’re enjoying going on holiday in that great new car. Nothing can go wrong. Think again. What happens if you can no longer work or if you lose your job? Do you have a cash reserve and are you adequately protected through disability insurance? If your employer provides cover, make sure you understand the conditions. You may need to insure yourself against additional disability types.

None of like to consider our own mortality. You may be a perfect parent, but if you have not adequately provided for your dependents in the event of your own death, you will have undone all the good you tried to do.

Check on the death benefits available from your retirement fund or your employer. Death benefits from a retirement fund can take up to 12 months to be paid out. This is to allow the trustees of the fund to trace all your dependants. To overcome this you need to provide your retirement fund with up to date information about your dependants and consider additional life insurance or funeral benefits that will pay out more quickly to tide your family over.

Are you investing in your health?

You may be doing everything else right, but if you are too ill to enjoy the benefits of your labour then it will be no fun. Look after yourself now to enjoy the benefits into the future.

Are you investing in your future income potential?

“Probably one of the most empowering activities you can engage in is self-development. It will create new opportunities for you and may even lead to a new career. In fact it is becoming increasingly fashionable to un-retire. You should set a learning goal each year. This will keep you young at heart, inspired and competitive in the job market. What are you planning to learn in 2006?” asks Hacking.

Next time you sit by the pool, you will be able to fully relax because you are in control, not because you are blissfully ignorant, says Hacking.


Click to view our Website Disclaimer

Leave a Reply

Your email address will not be published. Required fields are marked *