Financial Planning - Step 2
Where am I now?
Understanding where you are now with your finances gives you an important base to build on. You’ll be better placed to make good investment decisions if you know what resources are available to you.
Investor Profile says:
The best place to start is your income and expenditure, and your assets and liabilities. But don’t get bogged down with this. It’s easy to lose yourself in the detail with this sort of thing so keep it to ball-park figures.
What type of person are you with money. Do you like taking risks, do you enjoy saving, do you like to earn a lot and spend a lot? Establishing the sort of person you are with money (your money personality) and investments (your risk profile), will help you to make the right investment decisions. Check out What's My Profile? for more on this.
Once you’ve established some of the basic facts about your finances it’s worth looking in more detail at the individual accounts/investments you hold.
Within your liabilities in particular it’s worth considering the individual products. If you have a mortgage, loans, or credit cards then ensure these are consistently reviewed to check you have the best deal.
For your investments it’s important to know that they are still relevant. Investments can seem like a good idea at the time but can quickly fall out of date and therefore be unsuitable for your circumstances.
If you are like the majority of people you may have even started out with investments that were not suitable for you.
Starting afresh with your investments has never been easier but do be careful to consider any costs and/or tax implications before selling/transferring investments.
Once you understand more clearly what you have you can start to think about what you need to have, or should be aiming for.
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