Financial planning can help investors in several ways:
1. It can provide a structural framework for organizing and dealing with wealth in any
of its three embodiments;
(i) As a significant change in circumstances, though such means as inheritance,
the sale at public offering of an ownership position in a business, retirement
with large sum in various forms as self directed pension plans, award from
loyal judgments, lottery winning or other sources.
(ii) As a projected accumulation of income flows versus expenditure flows over a
span of years.
(iii) As an already existing established fortune in any of several farms, including
real estates, livestock, boats, aircraft, other real properties, art, antiques,
jewelry collections and various kinds of financial assets.
2. Financial planning can provide investors with a more comprehensive
understanding of the roles and effects of time in achieving established goals and
objectives, such as funding educational expenses, affecting inter generational wealth
transfers, beginning to receive social security benefits and meeting retirement
spending targets, and donating assets and/ or income flows to philanthropic
institutions.
3. Avoiding surprises.
Financial planning should identify what may happen to the firm if different events
take place i.e. it should address which corrections? the firm will take if things go
seriously wrong or if assumptions made today about future have an error.
4. Financial planning derives from the arrays of information, choices and decisions
that surface before the investors.
Financial planning leads the investors to consider key subjects such as:
(i) The forms, amounts, vehicles and beneficiaries of life, property, lomg-term
care, medical and disability-insurance coverage.
(ii) The type, duration, conditions, supporting organizations, and family limited
partnership.
(iii) For business owners/ or self-employed, succession, retirement planning,
insurance, and funding buy-sell agreements.
(iv) The size and timing of tax payments including income, capital gains, estate,
gift property, and other taxes at the local state, federal and in some cases, at
the international level.
(v) The use, timing, the structure of qualified Domestic Reliant Orders (QDROS),
employer-furnished benefits, and pension and retirement-account inflows
and
outflows.
(vi) The casts, conditions, magnitudes, and risks of borrowing and other forms of
explicit and contingent liabilities.
(vii) Having an updated will and estate plan. These assessments provide the
investors and his or her sources of financial and legal counsel with an
integrated, consistent platform for making investors recommendations and
decisions.
5. Increasing awareness of the potential needs, to make decisions that balance
tradeoffs between various financial objectives.
6. Timely attention devoted to important monetary and personal issues well in
advance of
their reaching a critical stat
7. Examining interactions. Financial plan must make explicit linkages between
investment proposal for the different operating activities of the firm and the
financing choices available to the firm.
8. Exploring option. Financial plan provides the opportunity for the firm to develop,
analyze and compare many different scenarios in a consistent way. Various
investment and
financing options can be explored, and their impact on the firms? shareholders can
be evaluated.
NatalieR answered the question on June 17, 2022 at 10:33