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Investment Matters: Known Unknowns?

When it comes to making buying decisions, we are indeed strange creatures. Many of us would agonise over purchasing the right three-piece suite or washing machine, squeezing out every last pound in the pursuit of sound value.

But when it comes to making the most significant decisions of our lives – such as which investment or retirement plan to choose, or how to plan our estates for the benefit of future generations – decisions are often taken hastily and then put into a box in the corner,

This approach can cost consumers thousands of pounds.

At first sight, this can look irrational. It might be a case of over-confidence ……. after all, there’s not much to this financial planning lark, is there? On the other hand, and perhaps understandably, consumers may bring to mind the poor past practices of financial advisers and conclude that such a “profession” has little or nothing to bring to the party. If you haven’t been in touch with a financial planner for a while, you`ll probably be surprised by how much they have been forced to “up their game”.

According to the Financial Planner Sanlam UK, nearly half of 1,000 consumers surveyed had no plans to talk to an adviser about their finances and preferred to manage their finances themselves.

Older generations were the least likely to have spoken with a professional advisers. Over half (51%) of those over 65 had never taken any financial advice, with 57% saying this was because they could do it on their own.

Never is the phrase: “knowledge is power” more appropriate than in a financial planning context. Whilst speaking to family members and trusting your own instincts may get you some of the way, it will really be useful if you can arm yourself in advance with the process that accredited financial planners themselves use (and charge handsomely for into the bargain!).

Broadly, you should:

  • understand your numbers, using a basic cash flow tool.
  • consider your attitude to investment risk.
  • be aware of how much of a reduction in capital you could put up with in the shorter term based on your financial circumstances.
  • get a feel for the cost of investing, who you are paying and for what!

Most of this can be achieved free of charge using the tools provided on this website. If you feel that guidance and direction are needed, then simply book a slot to chat through the various options available to you with a professional money coach. No specific products are discussed – just principles and the general facts surrounding your possible decisions.

Only after you have done this type of spade-work can you be confident that you have positioned yourself appropriately to take regulated advice – if you think this will be helpful. You will be more familiar with what to look out for and will be less likely to take an adviser`s suggestions at face value.

Sanlam found that there were significant differences between advised and unadvised savers. Advised clients felt twice as confident about being able to retire how and when they would like to (59% vs 30% non-advised).

You should aim to be more confident in your own financial decision-taking. Once you take this first step, you should find that you`ll no longer have to just cross your fingers and ignore that box in the corner…….

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