Unividual’s Andy Lei considers how it’s a great time to reconsider your financial planning
As someone who grew up in a Chinese family in the UK, Chinese New Year is always an exciting time of the year. Whether it is the smell of mum’s cooking, the assortment of different Chinese sweets or the excitement of seeing your friends. It is also a time for families to reflect on the year and that the new year will bring new hope and prosperity.
2023 is the year of the Rabbit 兔 and if planning your finances were a Chinese Zodiac, it would totally be a rabbit as it symbolises longevity, positivity, cautiousness, cleverness and protecting yourself to just name a few.
One of the main traditions during Chinese New Year is for the children to receive ‘red pockets’, which are filled with money and a sign of good luck. I still remember vividly when I was a child and had to hand my red pockets to my parents so it can be used to pay the bills or to recycle and give it to their friend’s children- almost as an exchange.
However, it is a different time now. Could we do things differently to build up financial resilience? A common misconception is that you will need a large sum of money to seek financial advice and to build financial resilience. However, you can help build up you or your child’s portfolios as early as you want.
Why should I start investing early?
A financial adviser will tell you that an investment might start off small but as it earns interest, the investment and the added interest, earns more interest. Starting at a young age allows for the investment to grow longer. This concept is known as compound interest, or as I like to call it the ‘snowball effect’.
Let’s look at a practical example. If we start putting away £100 a month with a standard annual growth of 5%. This ‘red pocket’ alone would be worth £35,446.80 after 18 years. This can help with university fees, buying their first home or something to help your children jumpstart their career.
Why should I seek financial advice if I can do it myself?
A big question you might be thinking now is why do I need a financial planner if I can do it myself? We all love to feel empowered and at the end of the day who would know what we need more than ourselves. Well, the areas which a financial planner explores are symbolised in the Chinese rabbit:
1. Longevity & Independence
This is all about protecting your future self, thinking about how much you need to invest now to achieve what you want to achieve in the future and/or for retirement.
These are some thoughts that can put us off from dealing with our finances as it seems so far away and complex. However, it CAN be an enjoyable conversation. Whether this is looking at the different arrangements you have available, if your financial plan is appropriate for your needs or providing a snapshot of what your investments and pensions can potentially look like in the future.
Of course, there is the importance of investment sustainability, your attitude to risk and your considerations for investing ethically or not.
2. Positivity & Wellbeing
Financial advice is not about one person dictating the conversation. At the end of the day, YOU need to feel safe and comfortable. It does not matter how much money you have in your pocket, if you do not feel safe or you are not doing the right things for you and/or your family, you will feel stressed around money matters. These stresses we can subconsciously and unintentionally pass down to our children and grandchildren too.
A chartered financial planner will provide you with tools and knowledge so that you feel empowered and part of the conversation.
3. Cautiousness
At Unividual we have the breadth of experience and knowledge to help people with every area of their business and personal finances. This includes advisers who have advanced retirement and pension planning qualifications for technical areas of advice like defined benefit transfers.
So, whether this is insurance, protection and life cover, pensions, savings or investments you can have just one person making sure all of the areas are signing inline with the same hymn sheet.
Why not check out our Ultimate Guide To Financial Planning
4. Cleverness
At Unividual, we are proud to say that we like to geek things up! Whether this is making sure that you are utilising all your tax allowances or computing formulas and providing options to make sure that you are in the best position that you can be financially.
When it comes to educating and communicating to clients, however, we do not use jargon or technical language. Our goal with every client is to ensure they understand all their options and have the power to choose what they want to do with their financial plan with our guidance and support along the way.
To achieve this, you will have lots of questions you feel are silly or irrelevant, and you will be encouraged to ask them so we can discuss everything out loud. This again reduces anxiety around your financial plan.
5. Protection
We are all guilty when it comes to protection and covering ourselves from risks, whether this is making sure that you have enough rainy day money or having the appropriate life assurance policies in place. A financial planner will guide you through a simple process of looking at what risks you have around you that could impact on your financial plan.
Although it might not be considered as the most exciting part of your finances, to us it is the most important. Whether this is protecting your mortgage liability, family income or inheritance tax. People and businesses who do not have this in place work hard to build up savings to find one day that pot depleted in an emergency.
This not only puts your future at risk but that of your children, grandchildren or loved ones (we don’t all have children!) whoever is set to inherit your estate. Insurance aims to protect your savings and keeps your plan on track at times when you may not have an income.
There is no get rich quick
Legend has it the Rabbit was proud of its speed. He was neighbours with the Ox and always made fun of how slow the Ox was. One day, the Jade Emperor said the zodiac order would be decided by the order in which the animals arrived at his party. Rabbit set off at daybreak. But when he got there, no other animals were in sight. Thinking that he would obviously be first, he went off to the side and napped.
However, when he woke up, three other animals had already arrived. One of them was the Ox he had always looked down upon. Rabbit learnt a huge lesson that day, one it cherished forever. Financial planning isn’t about getting rich quick or being the first to the finish line. It is designed to help you sleep at night, reduce your stress and protect your future.
You can either be in charge of that yourself or you can enlist a professional, who just like a family member or friend, will be there for you at the hour you need help the most.