Making Financial Decisions in a Dynamic World

If anything, global events have had their impact in already three years. Large spikes in uncertainty because of new (COVID) or known (tensions between Russia and Ukraine, Israel and several neighboring countries) unknowns. When it comes to financial matters dealing with unknowns is the bread and butter of the money and advice industries.

Of course, it is terrible to witness human and animal suffering because of forces of nature or acts by humans. We do what we can to alleviate the pain, to support availability of food and shelter and offer a friendly word to those in need.

Yet, the moment we deliver a financial plan we know it is incorrect in its precision to predict exactly how much currency is in your bank account at the end of the year, let alone 5 years from today. So why do it, financial planning?

The power is not in its exactness but in its demonstration of financial consequences of human behavior. If we tell you that you have room in your budget to choose between:

• More consumption
• Expand your estate by increasing assets or reducing debt
• Putting aside for later

you will favor a choice having an impact on your financial plan. You will move the needle of your financial compass, if you will. Financial planning is not how much you will have in a pot for a purpose on a given date; the scenarios will show you financial consequences of choices you make. Some scenarios are appealing, some are challenging. They will test your appetite, your preferences and help you choose what to do.

The past years have made many people more aware of being sufficiently financially independent.

Many people work on a buffer equal to three, preferably six, months of expenses. We think that is smart. When the buffer is full most people are open to choices, scenarios. When there is a lot of turbulence in the world many “turn off” risk, favor more security, certainty. We show them that if you accept less risk you should accept there is less return/income potential in your savings/investment. So this may impact life goals. There is no right or wrong here. Actions have consequences.

Our portfolio of investor clients has grown considerably in the past 3 years. Not every quarter was favorable to them, but most did. When you choose solutions fitting your plan financial decision making becomes so much easier!