An investment market is a volatile place and to keep up with its changes and to make the most of it in your favour, you need to review your financial plan at regular intervals. A static financial plan will not only turn useless over time but will also cost you in terms of your ultimate financial goals.
The reasons why financial planning should be reviewed periodically:
To analyse the performance of your investments and the worth of your portfolio, the role of reviewing the financial plan is indispensable.
To understand what makes reviewing financial goals so crucial, let’s take a look at the following points:
- Goals: A financial plan is like the map that guides one to their financial goals. Renewing your financial plan ensures that you achieve those goals within the set time frame irrespective of changing economic condition and inflation rate.
- Change in income: An increase or decrease in income would directly affect your financial goals. While an increase in income would lead to early maturity of your initial dream and improve the standard of your pre-set goals, a decrease in income may come off as a major hindrance towards their goals. In order to adjust to the change in the flow of income, it is important that you review your financial plan accordingly.
- Contingencies: Medical emergencies and sudden expenses can bear a brunt on your savings if you don’t have a separate provision to accommodate such emergencies in your financial plan. To be able to tackle such unexpected expenditure, review your financial plan frequently to replenish your contingencies for meeting emergencies.
- The dependents: Change in one’s marital status, the birth of a child or the sad demise of a loved one tends to affect the cash flow, which ultimately affects their financial plan. To keep your financial goal intact in such a situation, you need to review your financial plan according to the situation. Make sure to review your financial plan to make timely adjustments to incorporate changes at different stages of your life.
- Tax status: Growing tax burden may dampen your spirits to save and continue your investments. When you revise your financial plan on a frequent basis, it allows you to reshuffle your expenses and investments too efficiently lower the burden of tax liability.
- New Goal: An improvement in the living standard or a change in priorities may urge you to adopt a new financial goal. To successfully pave the path towards new goals, new strategies and investments must be included in the existing plan, that’s why reviewing the financial plan is important.
- Risk Tolerance: Risk Tolerance is crucial when it comes to framing a financial plan; the level of one’s risk tolerance may vary in different stages of their life and to incorporate those changes it is important to that you update your financial plan.
The possibility of achieving your financial goals increases automatically when you review your financial plan regularly. Contact our expert financial planners and advisors to review your existing financial plan and make adjustments as per the changing market environment.Follow Us: