The world’s largest asset manager, Blackrock, conducted an investor survey in 2013, asking 17,600 people in 12 countries how they felt about the markets and their personal financial situations. There are a lot of data points to consider, but one in particular stood out to us: about 50% of respondents are concerned they are going to outlive their savings.1
Many of these respondents could feel concerned simply because they don’t know where they stand. An investment plan can provide a little clarity (and perhaps a wake-up call) to investors wondering if their nest egg is going to last throughout retirement. Think of an investment plan as a manual, there to help you keep track of your progress toward building a successful retirement.
An investment plan is a comprehensive report that takes a detailed view of an investor’s assets, liabilities, current spending needs, future spending needs, investments, asset allocation, and goals, and uses all of that information to project/estimate how “on-track” an investor is to reaching their objectives.
A good investment plan will allow the investor to analyze their financial life through a variety of lenses. For example, what if you think you’ll achieve a 4% rate of return on your assets instead of an 8% return? Less growth on your investments means your assets may deplete more quickly if you’re spending a lot. Another example might be to say, “in year 10 of retirement, I want to buy a new house.” Or perhaps you want to plan for increasing health care expenses. How will those expenses affect your overall plan?
A dynamic investment plan will allow you to tinker with your approach to retirement, so you can have a better idea of how your investment returns and spending needs affect your ability to reach your goals.
We believe the best way to create an investment plan is to seek out the help of a financial advisor. Many investors can handle the creation of budgets and financial balance sheets, but the process of building a plan that can calculate future returns and cash flows, and can be adjusted based on a variety of factors (changing inflation rates, changing investment returns, factoring in rising cost of health care, and so on) is quite difficult and can be complicated.
At WrapManager, we create and regularly update investment plans for our clients to chart their retirement and to stay aware of how on track they are to reaching their financial goals. If you want to explore creating an investment plan for yourself and your family, please give us a call today at 1-800-541-7774 to get started, or answer a few questions here. One of our Wealth Managers would be happy to help you.
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