|
|
Wealth management is about managing your wealth or surplus funds to achieve a financial goal, example, to ensure capital invested is kept intact or the investment risks are well managed at all times. Wealth is defined as your net assets, after deducting your debts or liabilities. Wealth management is about managing your wealth or surplus funds to achieve your financial goals. Before deciding how your money should be managed, you need to determine the financial situation and financial goals for both you and your business. To do this you need to understand your business and personal financial goals and constraints. Analyse your business and personal financial position using net worth and cash flow analysis. Assess your business risks and personal risks profile. You need to take into account your personal financial situation because as a business owner, your financial situation is closely tied to the state of your business. Once you have determined your net worth and set your goals, you will need to have an action plan to achieve your goals. Currently, many businesses practise some forms of wealth management through insurance and investment.
|
|
ASPECTS OF WEALTH MANAGEMENT
A comprehensive wealth management plan should generally include ways to maintain, grown and distribute assets which would involve the following
- Debt and cashflow planning to enable efficient and optimum use of credit for the business.
- Investment planning and management to maintain wealth and ensure adequate returns.
- Insurance planning for business protection ( fire, theft, marine of key-man insurance) and personal protection( death, disabiltiy, critical illnesses and household)
Tax planning to minimise unnecessary cash outflows and ensure efficient cashflow management.
- Retirement and welfare planning for employees to ensure retention of key staff for business continuity.
Retirement and succession planning to ensure that the business can continue to operate smoothly when the business owner leaves the business.
- Estate planning to ensure efficient wealth transfer to successors and beneficiaries.
|
|
CASH FLOW PLANNING
Managing cash inflows and outflows is the first step to have a better understanding of your financial position. Proper management of your cash flow would allow you to utilise any surplus funds to your benefit based on their availability over the short, medium or long term and also allow you to meet your obligations as they become due.
INVESTMENT PLANNING AND MANAGEMENT
Your investment plan would depend on your goals and your willingness to take risks. You need to monitor and perform regular review on the performance of your investments to ensure that you are on track to achieving your goals. Your investment plan may be modified based on the performance of your investments or changing market conditions. In designing an investment plan, you need to consider your investment objectives, an asset allocation strategy to meet the investment objectives, the types of investment products to meet your goals.
|
|
|
|
TYPES OF INVESTMENT PRODUCTS
It is important to understand the product before you invest as different investment products have different risk levels and time period for the product to provide the best yield. A comprehensive wealth management plan should generally include ways to maintain, grow and distribute net assets. Your investment plan would depend on your goal and willingness to take risks.There is a trade-off between risk and return. The higher the potential return, the higher the potential risk. It is advisable that you invest only in products that are consistent with your risk appetite.
|
|
INSURANCE PLANNING
An insurance programme should be part of your plan to protect against the risk of unexpected financial losses. This will include protection for losses from fire, flood and other risks to your business and the purchase of health and life insurance for yourself and your employees. The amount of insurance depends on your needs, the circumstances as well as the objectives. Insurance protection should be reviewed regularly to ensure that the protection is adequate based on your current situation.
|
TAX PLANNING
The goal of tax planning is to manage your financial affairs to minimise your tax payable. The amount of tax pay will affect your decisions on the folowing - Investment, Borrowing, Savings. You may refer to the income tax guide for further information on the types amount of taxes that are levied on different types of income and the types of expenses which are deductible from your income. Alternatively, you may also seek advise from a tax consultant or a financial advisor.
|
|
RETIREMENT AND SUCCESSION PLANNING
Retirement planning is an essential aspect of wealth management. As a business owner, you will need to consider the following issues:
The timing of your retirement
The amount of money you need to continue your current lifestyle
The succession plan as to who and how the business will be run after you retire. This is to ensure that there is a plan in place which will maximise the selling price of your business or enable the business to continue with minor disruption
Factors to consider when developing a retirement plan are:
Future retirement needs
Current living standard / style and future expenses
Total funds accumulated (investment & savings) taking into account inflation insurance and taxation
Family circumstances (number of dependants, age, education needs, etc.)
|
ESTATE PLANNING
Estate planning is the process of making proper arrnagements for the disposition and management of one's estate at death. This can also avoid legal and administrative complications that may arise. Benefits of estate planning include
- smooth and efficient transfer of wealth to family members or loved ones
- proper management and /or distribution of wealth/business
- Avoidance of disputes/legal tussles over the distribution of wealth
Wills, trusts and foundations are common tools for estate planning.
|
BENEFITS OF WEALTH MANAGEMENT
Benefits of wealth management include better utilisation of free funds, minimising tax on investment and maximising return on investment on a given risk appetite
FINANCIAL PLANNING ADVICE
Managing Your Debt
Are you Excessively in Debt
|
