Modified on: June 2023
Embarking on a financial plan is like sailing around the world
How to Create a Financial Plan
Creating a financial plan is like a long sailing trip. The voyage wonât always go to plan, and thereâll be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised.
A mistake many inexperienced sailors make is not having a plan at all. They embark without a clear sense of their destination. And once they do decide, they often find themselves lost at sea in the wrong boat with inadequate provisions.
Likewise, when creating a financial plan, you need to decide on your goal by asking yourself the three most important questions. A first step might be to consider whether the goal is realistic and achievable. For instance, while you may long to retire in the south of France, you may not be prepared to sacrifice your needs today to satisfy that distant desire.
Once you are set on a realistic destination, you need to ensure you have the right equipment to get you there. Have you planned for multiple contingencies? What degree of âbad weatherâ can your plan withstand along the way?
Navigation of Your Financial Plan
Key to a successful voyage is a good navigator. A trusted independent financial advisor is like that, regularly taking coordinates and making adjustments, if necessary. If your circumstances change, an independent financial advisor may suggest you adjust your course.
As with the weather at sea, markets can be unpredictable. A sudden wind can whip up waves of volatility, tides can shift, and strong currents can threaten to blow you off course. Like a seasoned sailor, an experienced financial advisor will work with you to help you manage the conditions.
Once the storm passes, you can pick up speed again. Just as a sturdy vessel will help you withstand most conditions at sea, a well-diversified portfolio can act as a bulwark against the sometimes tempestuous conditions in markets.
Circumnavigating the globe is not exciting every day. Patience is required with local customs and paperwork as you pull into different ports. Likewise, a lack of attention to costs and taxes is the enemy of many people’s financial plan.
Distractions can also send investors, like sailors, off course. In the face of âhotâ investment trends, it takes discipline not to veer from your chosen plan. Like the Sirens of Greek mythology, media pundits can also be diverting, tempting you to change tack and make foolish decisions.
Making Course Corrections
A lack of flexibility is another impediment to a successful investment journey. If it doesnât look as though youâll make your destination in time, you may have to extend your voyage, take a different route to get there, or even moderate your goal.
The important point is that you become comfortable with the idea that uncertainty is part of the investment journey, just as it is with any sea voyage. That is why preparation and planning are so critical. While you canât control every outcome, you can be prepared for the range of possibilities and understand that you have clear choices if things donât go according to plan.
If you canât live with the volatility, you can change your plan. If the goal looks unachievable, you can lower your sights. If it doesnât look as if youâll arrive on time, you can extend your journey.
Of course, not everyoneâs journey is the same. Neither is everyoneâs destination. We take different routes to different places, and we meet a range of challenges and opportunities along the way.
But for all of us, itâs critical that we are prepared for our journeys in the right vessel, keep our destinations in mind, stick with the plans, and have a trusted navigator to chart our courses and keep us on target.
All the best,
James Mackay, Independent Financial Adviser in Bristol
P.s – if you want a little more help with navigating your investments, check out the 7 Simple Steps to Investment Success.Â It provides you with a proven process to help you avoid costly mistakes and tilt the odds in your favour. You can get a copy by clicking here.
Financial Advisor Bristol and Pension Advisor Clifton
About us: Frazer James Financial Advisers is a financial advisor, based in Clifton, Bristol. As an independent financial adviser, weâre able to provide independent and unbiased financial advice. We provide independent financial advice, pension advice, investment advice, inheritance tax planning and insurance advice.
If you would like to speak to a Financial Advisor, we offer an Initial Financial Consultation without cost or commitment.Â Meetings are held either at our offices, by video or by telephone. Our telephone number is 0117 990 2602.
Frazer James Financial Advisers is located at Square Works, 17 â 18 Berkeley Square, Bristol, BS8 1HB.
This article provides information about investing, but not personal advice. If you’re not sure which investments are right for you, please request advice.
Remember that investments can go up and down in value, you may get back less than you put in.