Plan for the future in 2011

January 1 is the start of a new year and your prime focus should be on managing your wealth. Try to understand where you are coming from, the life you wish to lead and the challenges you are likely to face.

Succeeding in your career, getting married, raising a family and having more than enough money to enable you to enjoy your retirement are likely to hold importance in your life.

Working with a professional to help you review and formalise a wealth approach could be a key element to achieving results.

Consider working with a qualified financial planner. This is a process of estimating current and future financial needs and making plans to achieve them.

Budgeting

It is important that you stay in control of your monthly obligations and what you anticipate to be large financial outlays in the future and a financial plan can help with that.

Financial planning covers a wide range of important topics including budgeting, expenses, debts, savings, retirement planning and insurance.

The process is not just for the individual or family but small businesses as well.

Although goals may be slightly different, the approach to financial planning and wealth management is quite similar — striving to achieve financial independence and preparing for unexpected events seem to be the most common goals.

However, other areas that would be a focus include business succession and how you would leave a legacy to a family member. If financial planning does not seem like the right fit for you, at least take time to review your current investment selection.

Asset allocation attributes to at least 90 per cent of the return on your total investment portfolio.

You need to look at each investment and determine what has made you money and what has lost you money.

If your investment made you money, ask whether or not it performed better than the benchmark or worse. 

If it lost you money, was it due to market performance or company performance? 

Portfolio

If you have mutual funds, question if the fund manager added value to the return.

If you are paying fees for a discretionary portfolio, find out how your fees compare to those of competitors.

If you do not have the time or interest to do this type of evaluation, work with a professional wealth manager. 

Make sure they can provide you with an independent opinion and not a sales pitch about their own line of investments.

Spreading your wealth is also important, not just in the traditional sense, but by working with several investment firms.

Never put all your eggs in one basket. It is important to diversify. But it is equally important to recognise that over-diversification can happen.

Make sure that one investment does not mirror another investment held elsewhere.

You work hard for each penny you earn. Make sure your investments are working twice as hard for 2011.

Carla Seely is a senior wealth manager at AFL Investments Ltd. Call 294-5712 or

e-mail [email protected]