Happy New Year!
So, here we are in 2018 and you have been thinking about your personal goals for the next 12 months. Whether you’ve been in Dubai 1 year or 10 it is a useful time to take stock of your progress towards your longer term targets. So what should be on your financial check list?
All the end of year festivities are expensive, so now is a good time to check your emergency fund. Make sure that there is enough to cover 3-6 months of your expenses.
If you have moved home you should make sure that all of the companies with whom you hold financial products are aware of your new address. Life assurance companies hold millions that have been unclaimed, don’t let your money be added to their coffers.
If you have changed jobs, congratulations on the new post. Few people move jobs for less money but you should check the level of employee benefits such as life assurance, medical insurance etc. to make sure that you are no worse off. Many people I speak to do not have a detailed knowledge of their employee benefits. I would recommend that you check what they are if you are in any doubt or don’t have them in a formal contract.
If you have not changed jobs then you need to make sure that your financial planning remains on track with your ‘personal inflation rate.’ This is different from the rate of inflation in the general economy as it accounts for any change in your income and expenses. Savings plans and pensions contributions should be increased or decreased in line with your personal inflation rate on an annual basis so that they maintain a purchasing power that is relevant to you.
If your marital situation has changed whether it is beginning or ending a relationship your financial responsibilities will be affected and you need to consider the change demands on your personal financial circumstances.
If you have a new baby, congratulations on the new arrival, I don’t need to tell you that this changes every aspect of your life not just financial responsibilities. You should make sure that your baby is adequately provided for whether you are there to see him or her grow up (school/university fees etc.) or not (life assurance or other major asset to cope with the costs of bringing them up.)
The beginning of the year is also a good time to re-read your Will and make sure that this vital legal document is up to date.If you don’t have a Will set a date and get one written by a legally qualified person.
You should value all of your investments (or ask your financial adviser to do it) and review each one. Not just in terms of the returns achieved but also where it invested; what it is investing in; who is managing it and many other aspects that may have changed over the last 12 months. After all it is not only your circumstances that may have changed – investments and investment advisers change too.
Your adviser should also check your risk profile at least once a year – as our circumstances change, our views on risk also change and it is important that you are invested in assets that suit your risk profile.
You should monitor the progress of your investments towards your longer term goals like achieving financial independence (e.g. retirement.) These take years to achieve demanding patience and perseverance. These plans are long term in nature and so strategies will not need to be changed every year but they will likely be amongst the biggest investments you ever make so it is vital that they are looked at regularly.
If you have any thoughts, comments or questions please let me know.
Wishing you a Happy and Prosperous 2018!