|'Planning' means finding a balance
between risk and reward that satisfies your personal preferences.
And that's all it is.
You don't need to plan
Shocking, isn't it? But how much planning do
you do for your life ahead? Some of us are goal-oriented and live
structured, organised and focussed lives. Some of us prefer to just
sort of muddle along, picking the daisies on the way. And some of
us do a bit of each - launching into the unknown, but occasionally
taking a bit of time off to scan the horizon.
If you are not planning person, don't do it. But don't
use that as an excuse not to understand the principles of saving
and investing - that is a basic life skill.
The case for planning
The decisons you are making on saving and investing
will have financial consequences over the rest of your life. Is
it not possible that if you had an understanding of those consequences
you might change your decisions today?
The obvious example is that if you do not save enough
early enough you will have a very constricted retirement. But there's
much, much more:
- Maybe you expect to have enough extra for
half a villa in Spain? In which case, if it's your dream, why
not take greater risks with your investing - which may give you
a whole villa in exchange for a risk of no villa at all?
- Maybe you have near-term financial goals
that are important but further out you are prepared to take more
- Maybe you should be taking higher investment
risks while buying more insurance against specific catastrophes?
The process of planning allows you to cycle through
your options, evaluating the effect of different spending, working
and investing plans to find a balance that suits you. Professional
help at this point, from a qualified financial planner who is also
unbiased, will save you a lot of time and trouble. 'Unbiased' means
The case against planning
You don't really want to be bothered, do you?
And sometimes, as with medical check-ups, you'd just rather not
The good news
.......is that if you follow the teaching paths of this site, you
will end up doing some planning without knowing you are doing it.
The other good news is that you can take a lot of
time over it and it needn't all be hard work. Chatting over attitudes
to home ownership with your life partner over a gin and tonic in
the evening sun counts as planning.
At some point you may feel that it is worth spending
a few hundred pounds to get some help from a professional adviser.
We would encourage this, but make sure you get the right type of
That's the end of the Foundation module. Your next move may be to
return to each one of the eight steps that are relevant to your
situation and where you need help. Or you may want to move on to:...........