How to Secure Your Finances for the Long Haul

Entrenching one’s financial stability for the long-term may appear to be a formidable undertaking. Renowned financial adviser, Gemma Evangelou, from Fidelity International, presents seven essential steps to aid in crafting a enduring financial strategy that could prove beneficial to a majority of individuals.

The initial step involves prioritising the settlement of loans and credit card balances. Personal loans and credit card debt often accumulate exorbitant interest rates, resulting in substantial long-term costs. Evangelou firmly advises against borrowing unless absolutely necessary, and recommends discontinuing the use of credit cards to avoid succumbing to further temptation.

The subsequent step is to procure life insurance. In instances where one’s place of employment does not offer life cover, it is prudent to consider acquiring term insurance through a discounted broker or a life insurance adviser. This serves to ensure that one’s loved ones are financially safeguarded in the event of an untimely demise.

The third step entails maximising one’s pensions, commencing with the company pension scheme. Evangelou underscores the significance of availing oneself of employer contributions and the tax advantages associated with pension schemes. The establishment of a contingency fund follows suit, with a recommendation to set aside the equivalent of six months’ worth of outgoings in a cash Isa or another tax-efficient account, as a crucial measure for unforeseen expenses.

Upon securing the contingency fund and maximising one’s pension, consideration should be given to investing in an Isa. Evangelou suggests that investment in passive or tracker funds provides a low-maintenance option. Additionally, she advocates the deliberation of bonds to mitigate risk and balance one’s investment portfolio.

The fifth step involves the formulation of a will and the establishment of a lasting power of attorney. Evangelou underscores the importance of future planning, and the minimisation of complexities and tax encumbrances for loved ones in the event of one’s passing.

Finally, in instances where the process appears overwhelming or perplexing, Evangelou advises seeking financial counsel. A financial adviser can offer guidance on intricate financial planning, aid in the minimisation of inheritance tax liabilities, and help forestall impulsive decisions during market fluctuations.

Adherence to these steps may aid in the establishment of a robust financial plan for the future. It is important to note that while it does not provide a one-size-fits-all solution, it serves as a solid starting point for securing one’s finances. By implementing each step, one can take charge of their financial well-being and embark on the new year with a well-defined plan in place.

It is imperative to bear in mind that financial advice should be customised to one’s particular circumstances, and resorting to professional guidance when necessary is always judicious. Should the need for assistance arise, do not hesitate to consult with a financial adviser to navigate your financial journey.

With these steps set in motion, one can initiate the new year with confidence and a sense of security, knowing that strides have been taken to safeguard their financial future.

Authored by Gemma Evangelou, Wealth Adviser at Fidelity International.