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Our finances are in a constant state of change. Not only do financial markets fluctuate, but our financial needs also change over time, while growing your wealth and security is a life-long commitment. Generally speaking, most people pass through three primary life stages as they age and while income levels, spending patterns and family situations may be unpredictable, they do tend to follow a pattern and it is these events that will dictate what priorities you need to focus on and the financial decisions you need to ultimately make.
With the ability, knowledge and expertise to understand your financial goals, objectives and dreams, a financial advisor can stir you to the right financial path at any stage of your life as they take anticipatory steps to prepare you for the next phase long before you get there. And as your objectives change, the role your financial advisor plays must also alter.
With all the above in mind, here are some tips on what to expect from your financial advisor at different life stages.
If you are in your 50s, chances are that the financial goals you had set for yourself 20, 10 or even five years ago may very well be different than the ones you have established at this point in life. Similarly, someone who is one step close to retirement, may have altered their priorities and the manner in which they handle money to that when they were younger. For instance, an individual in their late 20s may not have much capital, however, they can afford to invest the little they have more aggressively compared to a retiree who might be more focused on reallocating their risky investments into dividend-paying stocks that could provide them with passive income during their retirement. This is why financial planning and investing should change as you enter and exit the different stages in your life. And this is where a financial advisor comes in. Armed with the necessary experience and knowledge, they can help you prioritise you needs and help you achieve your financial goals no matter your age.
Here is a breakdown of the typical life stages individuals go through and what to expect financially and otherwise in each one.
As a young adult, probably fresh out of university and just having set foot on the career ladder, you may be lacking the financial basics, while setting up financial goals may be too far off your mind. However, building a financial foundation at this stage in your life is crucial. At the beginning of your career, you might not have much cash flow, but that could just as well change as you progress through life. So view these two decades as so-called learning phases, where you can educate yourself about managing your spending and saving within the constraints of your income levels. This is also a good time to explore investing, since with time on your side, you can make the most of higher risk investments and you can set yourself up for financial success.
Here is how your financial advisor can help you when it comes to financial planning in your 20s and 30s:
A time when your income is rising, your 40s and 50s may come with several responsibilities and potentially more expenses. As you grow, your family and finances during this so-called earning phase may also begin to increase. Moving into a bigger and nicer home, replacing your car with a new and improved version or paying for your dependents’ education can all consume your increasing income. While you should enjoy life, you must remember that the choices you make during these two decades will have a direct effect on the subsequent decades and can condition how you end up living in your 60s and beyond, so avoid adopting a work hard, play hard mindset. As your income increases, so too should your savings and investing activities.
Below are some key areas you should discuss with your financial advisor:
By this stage of your life, you are either nearing retirement or already retired – either way, you are readying yourself to slowing down. You may not be working anymore or you may be working part-time, your children would have left the nest and you have more free time in your hands to enjoy yourself and relax. Having said that, one of the biggest financial issues now is outliving your wealth. You need to make sure that not only you have sufficient funds to see you through each month, but that your wealth is enough to see you throughout your retirement. This is why this stage is known as the so-called return phase or cash flow phase.
What’s more, there are still a number of financial issues that your financial advisor should be able to pinpoint and help you address:
Want to find out more about financial planning? Discover how you can create an effective financial plan.
Financial planning is one part of the equation when it comes to your finances. The other, is investing. And just as you would expect your advisor to recommend changes to your financial planning, the same applies to when it comes to investing. Below are some pointers on the type of financial advice you should expect from your advisor at the aforementioned stages in your life.
Once you have set aside part of your salary to create an emergency fund and to pay things like your insurance premiums, you should create a plan to start investing some of your savings on a regular basis. Remember time is on your side, so the earlier you begin investing, the more you can benefit from the power of compounding.
Once you have laid strong financial foundations and settled on a stable budget, it is time to capitalise on your peaking earning power, most especially if you can set more funds aside for investing. In fact, your advisor should help you maximise your investment returns based on your risk appetite.
It is important that you regularly review the progress of your financial planning together with your financial advisor. This will help you to determine whether the complexities of the market are working in your favour and by consistently tracking your finances, you can ensure that your efforts are producing positive results.
Have a look at what rebalancing is and why it is important.
At this point, your investment horizon has gotten much shorter so you may want to preserve what you have saved by shifting more of your investments into less risky ones. In addition, you may also want to invest in a variety of products that can generate a regular stream of income.
If you wish to leave a legacy to the next generation, now is the time to review your wealth and take active steps to ensure that you have set aside sufficient funds for your dependants’ needs.
Looking to begin your financial journey but are stuck with no financial advisor in sight? Read through our ultimate guide to finding the right advisor and below are some things to consider before selecting a professional.
Deciding whether to get a financial advisor or managing your own investments is a big decision, however, remember that making the right financial decisions takes time, skill and effort and if you are certain that you do not possess any of the above, you will be better off with a financial advisor. You also need to bear in mind that investing is not a one-time thing, while delaying good financial decisions or prolonging poor ones could cost you.
The same applies if your finances are disorganised or you do not know how to invest. While saving can help you accumulate an amount of capital overtime, investing is one of the most effective ways to grow your money. In fact, have a look at the main differences between saving and investing.
And a financial advisor is even more imperative if you are consistently losing money. Your investments should increase your net worth, but if yours are not doing so systematically, then you have clearly made the wrong financial decisions. Ultimately, what makes a financial advisor worth it is their ability to keep you on track and identify financial risks and opportunities for you.
A professional who provides financial advice or guidance to customers for a fee, a financial advisor can provide several services. Some offer assistance, while others provide complete management, including handling tasks like trading and investing on your behalf, rebalancing your portfolio and other such-related services. A few may also provide an even wider array of services ranging from portfolio management to insurance products and everything in between.
In most European countries and especially in Malta, financial advisors must have the right qualifications, while they typically undergo specific training. In addition, they must also be registered with a regulatory body in order to provide their services. But putting qualifications and education aside, opt for a professional who has a wide experience and has been working in the industry for a number of years.
Picking the right professional for your situation is crucial otherwise you risk ending up working with someone who is not a good fit for your needs. Here are some benefits of enlisting a Calamatta Cuschieri advisor’s help:
Bespoke advice – whether you are looking to invest, plan for your retirement or manage your assets, our advisors can offer regular advice that matches your personal financial circumstance, while they work hand-in-hand with you to establish investment decisions with your best interest in mind.
A choice of financial products – with access to a full spectrum of investment products, Calamatta Cuschieri’s advisors can invest directly in the markets, which means that you have a wide choice of assets at your disposal, while you are not restricted to any particular investment.
Peace of mind – by keeping close tabs on the markets, taking care of a wide range of challenges on your behalf and by conducting thorough research to identify the best investment opportunities, you can rest safe in the knowledge that your finances are in good hands.
Whether you are looking to accumulate your savings so that you can pay for you children’s education, buy your first property or prepare for retirement, assessing your goals and having a clear idea of both your objectives and risk tolerance is crucial. Yet, as you progress through life and move on from one life stage to the next, every phase brings varied goals and priorities that require a different investment approach and your financial advisor can serve as your guide to making the right investment choices. Get in touch with one of our financial advisors today.
The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Similarly, any views or opinions expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the particular circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views, or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. CC does not accept liability for losses suffered by persons as a result of information, views, or opinions appearing on this website.
Calamatta Cuschieri Investment Services Ltd is licensed to conduct investment services business under the Investments Services Act by the MFSA and is also registered as a Tied Insurance Intermediary under the Insurance Distribution Act.
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