Planning is the key to financial success but you cannot plan without a goal in mind. One core item I address when I meet with a new client is to establish their financial freedom age. Your financial freedom age is not necessarily when you want to retire, it’s the age you want to be when you begin reaping the rewards of having made sound investment and financial decisions, and this will differ person to person based on your priorities. For some, financial freedom is having paid off the mortgage, scaling back work, or living off investment income, while for others it’s travelling more while maintaining your lifestyle.
No matter what financial freedom means to you, establishing a passive income stream that will eventually grow to replace or supplement your income is key to building wealth and maintaining it during your financial freedom years.
Passive income can come from a variety of sources but for many of my high-net-worth clients, investing in a portfolio of assets over time (shares, property, fixed income and alternatives) has been crucial in meeting their objectives. For example having a $750,000 commercial property, $750,000 Share Portfolio and $750,000 fixed income and alternatives portfolio can usually sustain taking $100,000 per annum (indexed) from age 55, I think we will see a lot more individuals in the future looking to working part time while travelling the world if they have the strategies in place in their 30’s and 40’s, not 50’s and 60’s like a lot of people do now.
Protecting wealth in a volatile market
Volatile markets are never going away, so risk management will always be an important part of the process. But risk is subjective. The best defence against market volatility is to engage a trusted financial advisor to guide you through uncertainty and deliver a financial plan that fits within your risk profile. We see many clients who are anxious about the market instability, but it is my job to ensure they avoid making rash decisions that are going to impact their financial freedom in a negative way, such as crystallising today’s poor returns by selling off assets and missing out on the inevitable market bounce-back.
A good financial advisor will provide you with greater insight into markets, coach you through the tough days, keep you accountable to your financial plan, and provide strategies so you are never in a position where you have to sell your assets to get through market instability.
Focusing on long term returns
~Novel Serialisation: Heavens Fire~
The old adage “it’s time IN the market, not timing the market” rings true here. No-one can time the market, and thus this doesn’t need to be a strategy to focus on. More important is remaining focused on your goals, and working with a financial advisor to ensure your investment portfolio is designed to ride out these storms and is aligned to how much risk you are willing to take for longer term upside
Partners Wealth Group empowers clients to unlock a world of possibilities, offering advice to assist at every stage of life. In an increasingly complex world, they provide a straightforward and trusted voice, translating the technical into the simple. For more information, head to pwg.com.au.
What age will you reach financial freedom? What does financial freedom look like for you?
By Rob Hand
About the author
Partners Wealth Group- Partner & Senior Financial Advisor Rob Hand
B.Com ADV DFS (FP)
Rob has been a vital part of the Partners Wealth Group since 2007 and has built a solid track record for delivering sophisticated solutions and strategies to build and preserve your wealth. He is a regular presenter at various accounting and client seminars, where he is sought after for a broad array of expert financial knowledge and expertise in SMSFs, investments, sophisticated advice structures and personal risk protection. Rob works with a very diverse client base, including executives, SME business owners and individuals and families requiring holistic wealth management and strategic advice.
Partners Wealth Group is one of Australia’s leading financial advisory firms, providing financial advice to individuals, business owners and organisations for over a decade. For more information, head to pwg.com.au.
