Financial Planning is Key to Building Wealth

Topic: Wealth Planning

Dianne C. White, CPA, CA, CFP, TEP

November 4, 2013


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Financial Planning is Key to Building Wealth

I have a plan…

It is only November, but the hype has already started for the 2014 Winter Olympics in Sochi.  A friend of mine who works for the Canadian Olympic Foundation sent me a link to a web article entitled “16 Reasons to Root Against the Evil Canadians at the Winter Olympics”.  This was written tongue-in-cheek from an American’s point of view.  However, the fact of the matter is, Canadian athletes are setting the bar for the competition.  Recall that in 2010 Canada finished third in the medal count, but more importantly, took home the most gold medals.  We owned the podium.

What leads to an athlete’s success?  Often it starts with a dream:  the commitment, hard work and perseverance follow.  However, just having a dream is not enough. Athletes need to have a clear picture in their mind of what they want to achieve and set goals for themselves. They need a plan. You may be wondering what this has to do with investing. At Nexus, we believe that a good financial plan is the key to making the right financial decisions and building long-term wealth.  Whether you are striving to win an Olympic medal or planning retirement, the first step to achieving your goal is to develop a plan that outlines the path you intend to follow.

Financial planning starts with your short and long-term goals

In any goal setting process there are ‘important-to-haves’ and ‘nice-to-haves’.  Don’t get distracted by those ‘nice-to-haves’ before you achieve your most important goals.  Start by setting realistic short-term and long-term goals for yourself.  These goals provide the guidelines for your financial plan. The next step is implementing an investment strategy that makes sense based on your plan.  Factors such as time horizon, risk tolerance and liquidity requirements need to be considered in order to determine an appropriate asset allocation.

Once you have determined your investment objectives based on realistic assumptions, you can execute your plan.   Athletes certainly know that putting the time and effort into a plan is one thing, but sticking to it is probably the most important factor that leads to success. This is also applies to a financial plan.  The one thing that is certainly true is that attaining your goals will never go exactly as planned.  So why plan at all?  Because planning and sticking to a strategy minimizes the variation of outcomes – you are more likely to achieve your goals. Planning is an iterative process. There will be changes to some of the assumptions and maybe even some of the goals along the way.  It is important to revisit and update your plan and not file it away never to be looked at again.

In this issue of Nexus Notes you will find one article that takes a look at bonds and bond returns.  It examines the role of bonds in client portfolios and the issues that are important to most investors.  There is also an article about planning for the risk of incapacity, which explains the roles of an attorney for property and for personal care.

We have a newsworthy announcement and would like to introduce to you the newest member of the Nexus team – Devin Crago. More on Devin can be found inside.  Finally, we are looking forward to connecting with many of you at our upcoming annual get-together to be held at the National Club on the 19th and 20th of November.   Hope to see you there!

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