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Thinking of doing your own financial planning yourself?

Financial planning addresses a wide range of issues affecting most people like you and your family. You may believe it is possible to carry out your own financial planning yourself, in theory successful do-it-yourself financial planning may be feasible if you have the knowledge, time, patience and self-discipline.

There is a lot to learn and then keep up to date with. The legislation about tax and pensions is complicated and constantly changing. Investments and investment products and markets are also in a more or less permanent state of flux, and you would have to make critical decisions on your own and then implement them.

You may also find it hard to make these big decisions alone. Financial planners are equipped with the know how to undertake their own financial planning, but they often use colleagues who are sufficiently detached to help them make sensible decisions.

If you decide to take on this area yourself then you will need to think about the following points:

  • Quantify and qualify your objectives - that is to say, write down exactly what you are trying to achieve and over what timescale. For example; retiring at age 65 on an income of £30,000 per annum net of tax.
  • Establish how much risk you are prepared to take - this should include a percentage of assets you need to keep in cash and short dated investments (for shorter term objectives) as well as a percentage that you are prepared to put at calculated risk on equity markets.
  • Establish how much you have to invest towards this goal i.e. a lump sum of £10,000 or a monthly investment of £100 per month.
  • Assess any existing investments you have that you intend to use for this objective.
  • Think about the best types of wrappers for tax efficiency e.g. pensions, ISAs,etc
  • Review what you are doing regularly and have the discipline to rebalance your investments back to your original split of cash and equities to ensure the risk you are taking does not increase.

But there are good reasons why you probably won't want to - even if you have all those characteristics.

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