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With just three weeks of 2018 left, it’s almost time for the end of year festivities. But before you launch in with wild abandon, it’s a great idea to take stock of the last 12 months and what you have achieved during that time. And one really important area to look at is your finances. An end of year financial review making sure that everything is in order will ensure that 2019 gets off to a flying financial start.
Here’s a list of six things you should do by the end of the year, especially if you haven’t already done them this year:
1. Review your emergency fund
One of the first steps in a financial plan is to accumulate an emergency fund of between three and six months of expenditure which you can fall back on if something serious such as an illness sends your finances into a spin. Keep it liquid so you can access it fast. One thing that clients often forget is that this an emergency fund needs to keep track with rising income and expenditure so if either of these have changed significantly in 2018, you might need to top up your emergency fund to reflect your new situation.
2. Revisit your investment goals
Have you looked at your investment goals recently? Are you still on track? Obviously a 50 year old will have different goals to a 30 something. Does your asset allocation still balance return and risk tolerance appropriately or do you need to make some changes? Maybe it’s time for a rebalance?
3. Review your investments
We’re never ones to advise meddling with investments for the sake of it – buy and hold is a strategy that works for most of our clients- however that doesn’t mean you can just invest and leave your portfolio to do its thing for decades. If you haven’t reviewed your investments with an adviser over the course of the year, make an appointment to do that in the next few weeks in case any underperforming assets need to be jettisoned for others which offer a better return.
4. Check your beneficiaries
Make sure that the beneficiaries of your life insurance, pensions and estate planning are actually the people that you want to receive the money. If you have experienced any major life changes this year – having a child, getting married or getting divorced – this is something that may have slipped your mind.
5. Project your taxes for 2018
In many jurisdictions, the end of the calendar year coincides with the end of a tax year. None of us want to pay more tax than we have to so it’s a good idea to take a look at what you will owe for the year so that you can take any possible steps to reduce the burden. These might include topping up pension contributions to max out allowances or, if you are self employed, making some capital investments or delaying invoicing until next year.
6. Set some goals for next year
Where would you like to be financially this time next year? Now is a good time to think about what you are going to do differently to ensure that you will be better off in 12 months time. Think of some concrete goals and write them down so that you can keep track of where you are at and will be able to tick them off when you have achieved them. Whether you plan to increase your monthly savings by 5%, start an education fund for your children or save for a deposit on a house, write down your goals and make them tangible. Only by doing that will you be able to work towards them logically and methodically.
Once you’ve got all your houses in order take time to celebrate your achievements of the year. We would like to wish all our clients – past, present and future – season’s greetings and a 2019 full of happiness, health and building wealth.
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