There are three primary reasons why people create a financial plan:
· To accumulate wealth: You may have certain goals in life, whether it is to save for college, purchase a home, or ensure your financial independence during retirement. Proper planning will help you achieve those goals.
· To generate income: At some point in life, we would like the choice to stop working. At that point, we would like our savings to cover our lifestyle and allow us to do the things we enjoy.
· To preserve wealth: Wealth preservation is an important objective throughout your life, especially after retirement. During retirement, there can be several factors, which can cause a reduction of wealth such as: unexpected nursing home expenses, income taxes, and poor investments.
How do you determine what type of investments are best suited to meet your primary goals? The type of investment and the amount of your investments should be determined by your current and future personal financial objectives. As you enter different stages of life, your financial objectives and risk tolerances may change. Understanding your objectives and potential risks will help you diversify your investments. Shabbir Bahora, CPA can guide you to achieve your investment objectives.
The most common risks to financial independence are:
· Lack of liquidity
· Loss of Part of your Original Investment
· Inflation
· Falling Prices
· Paying Too Much Income Tax
· Politics & Economics
· Premature Death
· Unexpected Disability
· Loss of Part of Estate Due to Taxes
· Psychological Risk
Each of these risks and possible investment strategies is discussed in detail here. However, in-depth discussion of your situation with a professional is critical to determining the appropriate course of action. Please contact us to schedule an appointment.
