Golden Wealth NestEggs
MONEY Morning News - Tuesday 13.8.2013
HOW TO DO YOUR OWN FINANCIAL PLANNING
Everyone works for money but very few plan how much money would be needed to meet each of their objectives. Financial planning must be done with regards to all activities concerning a person and in different viewpoints. A Financial Professional would like to show how to plan from the actual contexts which any consultant or a client would fear to do so, but I am being very sincere and honest as this is the surest and best way to plan ones life.
Five simple steps to consider in doing your own financial planning :-
1. Consider the possible difficulties. When doing your wealth inheritance or financial planning, plan in the context of the most unexpected situations and turmoil
2. Think about what can happen. If you or anyone of your loved ones die, what would be the consequences to be faced by yourself and / or your loved ones?
3. Ask yourself if you have a back-up plan. If you or anyone for whom you are responsible for, turns seriously ill or meets with an accident,
is there any back-up plan which would take care of that risk?
4. Consider risks and steps to take. After considering all such risks which could be related to your business like the after-effects of the death of a partner, death of the bread-winner, death of an earning parent etc., we step into wealth management plans.
5. Think about health plans and educational plans. There are also educational plans, family health plans etc.
(source : wiikihow )
Find out the best online Financial Planning Calculator to help you
Select a Financial Retirement Calculator is an interactive tool that helps you to determine if your retirement goal is achievable. It determines the amount of savings you need based on your desired retirement age and retirement lifestyle. It uses some of your assumptions for projecting the financial savings and investment plans. Use the estimated calculator gives you a simple way to compute the lump sum savings you may need for your retirement. For two examples given below : -
(a) How much would you need to have a monthly retirement income of 70% of my last-drawn salary and have it last for 20 years?
Assume Mr Kenny Tan, an IT Engineer aged 30 is drawing a monthly salary of RM6,000 plus 2 months contractual bonus per year.
The assumptions were used in the calculation are :
- His desired retirement age is 62,
- His retirement income savings should last until age 82 years,
- Income Replacement Rate or Desired Requirement Income (% of his last drawn income at his retirement age) is 70%
- Annual Increment Rate is 2.5%
- Inflation rate is 2% and Investment Return during retirement age is 4% p.a.
To retire at 62, you may need $1,150,719 (in future dollars), which is 13.70 times your current annual income. This is the amount you would expect to have in 2045. It would give you a monthly retirement income $5,730 for 20 years. Owing to inflation, the amount of $1,150,719 is equal to $610,610 in today's dollars. The monthly income of $5,730 is equal to $3,041 in today's dollars.
(b) How much would you need to get a desired monthly retirement income for a fixed period?
Assume the above scenario is the same, then you will read the calculation differ below.
His desired monthly retirement income (in today's dollars):$6,000 per month ( same like earlier basic income )
Retirement income should last for 20 years
To retire at 62, you may need $2,270,764 (in future dollars), which is 27.03 times your current annual income. This is the amount you would expect to have in 2045. Owing to inflation, your desired monthly income of $6,000 (in today's dollars) would be the equivalent of $11,307 in 2045 when you retire. Similarly, the amount of $2,270,764 at 62 is the equivalent of $1,204,943 in today's
For a detailed how to do a retirement planning, please write to [email protected] or contact Alwin Yau at 6019 3232163.
Listen the Video below by Brian Tracy on How to be Your Own Financial Planner and the Financial Planning 101
Everyone works for money but very few plan how much money would be needed to meet each of their objectives. Financial planning must be done with regards to all activities concerning a person and in different viewpoints. A Financial Professional would like to show how to plan from the actual contexts which any consultant or a client would fear to do so, but I am being very sincere and honest as this is the surest and best way to plan ones life.
Five simple steps to consider in doing your own financial planning :-
1. Consider the possible difficulties. When doing your wealth inheritance or financial planning, plan in the context of the most unexpected situations and turmoil
2. Think about what can happen. If you or anyone of your loved ones die, what would be the consequences to be faced by yourself and / or your loved ones?
- What are the situations which would change then?
- Are these changes that what you would desire for?
- If yes, then let it happen and you would not need to plan in this context.
3. Ask yourself if you have a back-up plan. If you or anyone for whom you are responsible for, turns seriously ill or meets with an accident,
is there any back-up plan which would take care of that risk?
- These are based on the fact that in any financial plan must consider;
- Risk Evaluation - where all such risks are considered
- Risk Assessment - where the far reaching implications of each risk is assessed
- Risk Management - developing a strategy to manage all possible implications and handing over the critical risks to a professionally managed risk-management company.
4. Consider risks and steps to take. After considering all such risks which could be related to your business like the after-effects of the death of a partner, death of the bread-winner, death of an earning parent etc., we step into wealth management plans.
- How would you like to inherit ancestral property or pass it on to your children or relatives?
- Would you like to pay 50% as inheritance and wealth tax etc. or have a comprehensive plan where you could save millions of tax money?
- A retirement plan is simply all the expenses you are bearing in a month now add an expected inflation rate in twenty years ahead when you would be 55 years. Now calculate your monthly expenses (with additional medical expenses forecast as all would have ailments at and beyond 55 years) multiplied with 12 x 20, viz. for 20 years i.e. 75 years being the average life-span.
- This amount is what you should have at the age of 55.
5. Think about health plans and educational plans. There are also educational plans, family health plans etc.
(source : wiikihow )
Find out the best online Financial Planning Calculator to help you
Select a Financial Retirement Calculator is an interactive tool that helps you to determine if your retirement goal is achievable. It determines the amount of savings you need based on your desired retirement age and retirement lifestyle. It uses some of your assumptions for projecting the financial savings and investment plans. Use the estimated calculator gives you a simple way to compute the lump sum savings you may need for your retirement. For two examples given below : -
(a) How much would you need to have a monthly retirement income of 70% of my last-drawn salary and have it last for 20 years?
Assume Mr Kenny Tan, an IT Engineer aged 30 is drawing a monthly salary of RM6,000 plus 2 months contractual bonus per year.
The assumptions were used in the calculation are :
- His desired retirement age is 62,
- His retirement income savings should last until age 82 years,
- Income Replacement Rate or Desired Requirement Income (% of his last drawn income at his retirement age) is 70%
- Annual Increment Rate is 2.5%
- Inflation rate is 2% and Investment Return during retirement age is 4% p.a.
To retire at 62, you may need $1,150,719 (in future dollars), which is 13.70 times your current annual income. This is the amount you would expect to have in 2045. It would give you a monthly retirement income $5,730 for 20 years. Owing to inflation, the amount of $1,150,719 is equal to $610,610 in today's dollars. The monthly income of $5,730 is equal to $3,041 in today's dollars.
(b) How much would you need to get a desired monthly retirement income for a fixed period?
Assume the above scenario is the same, then you will read the calculation differ below.
His desired monthly retirement income (in today's dollars):$6,000 per month ( same like earlier basic income )
Retirement income should last for 20 years
To retire at 62, you may need $2,270,764 (in future dollars), which is 27.03 times your current annual income. This is the amount you would expect to have in 2045. Owing to inflation, your desired monthly income of $6,000 (in today's dollars) would be the equivalent of $11,307 in 2045 when you retire. Similarly, the amount of $2,270,764 at 62 is the equivalent of $1,204,943 in today's
For a detailed how to do a retirement planning, please write to [email protected] or contact Alwin Yau at 6019 3232163.
Listen the Video below by Brian Tracy on How to be Your Own Financial Planner and the Financial Planning 101
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