We all need to reflect

If you haven’t done a plan, then I would recommend now is the time to start.

For many of us our financial plans are non-existent. In fact, it would be fair to say we are like startled rabbits caught in car headlights. There are many things which confuse us and without plans cause us to make mistakes.

The start of 2016 has tested many investors and some have decided to take money out of the market to protect what they have. Whether this is right or wrong is a point to debate but in this first blog of 2016 I want to reflect on financial plans.

What is it all about

A few years ago I was introduced to the idea of budgeting and planning.

Budgeting was the first step to really understanding how much money came in and what went out. I am by no means an expert but in doing this it meant that I was more in control of the money we had, rather than the other way round.

The second stage was an evaluation of life. What is really important to us as a family, both in the short and long term? These are our goals. We now have a series of short, medium and long term goals which are a reflection of what we would like to achieve.

Some are very basic like a holiday and some are more complex like retirement but all of them are goals. The reality is that we cannot afford them all and therefore we focus on those we can (and on the ones most important to us).

Rules and restrictions

Some would argue that having a budget and plan means you are restricted in what you can do but I would argue otherwise.

Take an example; in planning for retirement we have worked out what income we would like and how much we need to save to achieve this. We have also assumed a level of growth on our investments and expected inflation. From this point all our investments are focused on the long term.

Before we made the investments we did our research and invested in a belief that over the long term these would deliver the growth needed. It doesn’t mean that at a certain point in time the returns would be considerably less.

One investment we hold we believe in the long term will be three times the price we paid for it. At one point it had doubled, and now with the recent volatility it is about 50% up. So in theory you could argue we have ‘lost’ money over the short term.

The investment is being held for a 10-year (plus) period, we have held it for about 4 years. In fact, during this time the fundamentals of the investment have improved. Some people would sell but we still believe in the long term. We can ignore the noise because of the focus on the long term goal.

The point of this is that budgets and plans are not rules and restrictions, they are about putting our life in focus. What is important to us, what can we afford and how can we afford it.


I love Christmas. It is not just the day itself and spending time with family but also it is a time to stop and reflect.

This is a perfect time to review plans and see if they are still right and whether we are still on track. One of things I have always been taught is that plans change. It is true some short term plans do change because once you have achieved them they are no longer part of the plan! Longer term plans rarely change.


If you haven’t done a plan, then I would recommend now is the time to start.

Your first priority is your budget. This tells you what comes in and goes out. Once you have that in the back of your mind, then think about what is important to you. What do you want to achieve and how do you realistically plan for that?

This is the start of the plan and can be as simple as three goals:

Short term Holiday 2017
Medium term Fund to cover potential redundancy
Retirement Retiring at 67

Each of these will have a cost and this is where you can work out how you fund these goals, and where to invest.

The volatility in the markets in 2016 (and 2015, 2014 etc) can mean we make irrational decisions especially when we have no plans because we don’t know what we want to achieve.

Therefore, it is not too late to get out a scrap of paper and write down what is important, what you want to achieve and then draw up a plan. The volatility and uncertainty will not go away but having a plan will equip you to deal with it! In future blogs we will consider how plans might look.

Note: This is written in a personal capacity and reflects the view of the author. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author. This is not a recommendation to buy any product or service including any share or fund mentioned. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.

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