Financial Success – Personal Financial Planning

This is my third posting on Financial Success. Here are my three methods for financial success: 

• Pay-yourself-first
• Life insurance
• Personal financial planning

Personal Financial Planning

You should consider working with a personal financial planner. The financial planner should be able to help you with the pay-yourself-first plan and life insurance.

The financial planner relationship should be considered a partnership, one which could start from your first job and continue for the rest of your life. You will be paying him a fee so you should get personal service. The service your financial planner provides should be similar to the service he provides for his own family. Don't be afraid to ask questions. Don’t be afraid to ask what he would do for his family.

Your personal financial planner will help make educated investment choices. Choose funds with the lowest investment cost. Balance the funds as they get out of balance. Review your portfolio on a regular basis. The financial planner should let you know if you are on track.  He will know about new funds and new tax strategies. These are items you may want to be aware of, but you don’t have to do the research.

In a long-term relationship, your personal financial planner will know your goals. He will know your family and its goals. Does anyone want to go to university? Do you want to build a cottage? Do you want to travel?

Choose a financial planner who charges a low cost for investment management. Management fees should be between 1 and 1.5 percent. These fees will typically decline as your investment portfolio grows.

Are you considering a bank for investment management? Typically higher management fees are charged at the banks and there is no long-term personal relationship.

I have had my relationship with my personal financial planner for about 23 years. Our most recent review shows our pay-yourself-first plan is working well and we are on track to retire as planned. I also have term life insurance to keep my family covered until my wife retires.

Thanks, Bruce.

@BruceFightsTTP

Financial Success - Life Insurance

This is my second posting on Financial Success. The first was Pay-yourself-first. Here are my three methods for financial success:

• Pay-yourself first
• Life insurance
• Personal financial planning

Life Insurance

Term life insurance is very affordable. The benefit can be chosen to help provide funds to your spouse and family after you pass away. I have chosen a 10-year term and just need to renew or repurchase before it expires. The long-term plan is to stop buying life insurance when we are self-insured from the funds of the pay-yourself-first plan.

An alternative to 10-year is 20- or even 30-year term. With a 30-year term, your family will be insured through the mortgage years and the time to get your children educated. A 30-year term is more expensive in the first 10 years, but the rate stays the same for all 30-years.

You may say, you don’t need life insurance, but anything can happen, including a rare disease like Thrombotic Thrombocytopenic Purpura (TTP). Once you have a known serious disease, you will no longer be insurable for a future plan. This is another reason to consider 30-year term, as you will not have to renew for 30 years regardless of your condition.

You may also have life insurance from work. This is great when you are working, but has no value if you get laid-off.

Consider repurchasing your term life insurance about two years before expiry. You want to collect new quotes when you haven’t had any medical tests in the last 6 months. If you have had tests, then you will have to run around gathering all of this information for your application. So if you have had tests, just wait until they are 7 or 8 months in the past and then start the repurchasing procedure. Don’t let your life insurance expire as one day you may not be insurable.

From the insurance point of view, I am no longer insurable meaning I cannot buy a new insurance policy. Luckily, I bought term life insurance when I was healthy. This insurance is renewable, albeit it a higher rate. My family is covered.

Thanks, Bruce.

@BruceFightsTTP