Q I am Sonia. I run a fashion boutique and my monthly income varies. I have a few fixed and recurring deposits in my name. I want to secure my future, including my retirement, and manage all tax liabilities. Currently, my expenses are more than my savings. However, I foresee a sale of my business shortly and am expecting a substantial valuation. Should I now seek help from a wealth manager or financial advisor?
Your queries have multiple dimensions. Therefore, a financial advisor will be able to help you best. You must start that engagement as soon as possible so that there is enough time to plan your financial future in tune with your goals.
However, before that, you must take stock of your financial situation. You would have prepared well for your first meeting with the financial advisor, when you pay attention to the following:
Set and meet savings target
You have said you spend more than you earn. Hope you save some amount whenever you can? Ideally, you should set a target of saving a specific percentage of your regular income every month.
Make and stick to a practical budget
You will find it easier to save if you make a budget that categorises and tracks your spending as critical and discretionary. Remember to also budget to build an emergency fund that can take care of your critical recurring expenses for 3 to 6 months, should the need arise.
Understand the essentials of financial planning
This is something your financial advisor will discuss with you in depth. You start by defining your goals—SMART (specific, measurable, achievable, relevant, time-bound) goals. Separate those goals into short-term and long-term (like retirement). Once you have this sketched out, you are in a good position to plan your investments.
Of course, like every individual, you too will have a distinct appetite for risks. Your investments must align with that. No doubt, sufficient insurance cover must be an important part of your plan. The fundamental idea of a financial plan is to help you meet your goals and also help you (and your loved ones) maintain the standard of living that you cherish right through life.
Optimise tax
You do not have to wait for a jump in your income to think about tax. Your advisor will help you save the most even as you scrupulously meet your obligations. Apart from making tax-efficient investments, you will make the most of deductions and credits even as you march on towards your goals.
How the advisor will help you
- Understand your goals and the timeline for each goal.
- Assess your current and potential income.
- Know your capacity to take risks to help strike the right risk-returns balance.
- Chalk out an investment plan designed to help you achieve your goals, including retirement.
- Monitor the progress of the investments.
- Make appropriate changes in plan when there is a significant event or change in your life.
- Chalk out an estate plan to ensure your wealth goes to the right people or cause as you wish.
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