No one knows what our lives will bring; that’s why it’s important to have a solid financial plan to create, protect and grow your wealth. But what exactly is a financial plan and how do you go about getting one?  Our three client case studies are fictitious but their issues are common to many of us.

TALIA is 65 and worked as a secondary school teacher. She has just sold her house in Auckland and retired to New Plymouth where she is now mortgage free with money to invest. Talia has 4 adult children and 3 grandchildren.

Talia has a healthy sum of $1,465,000 to invest from the sale of her Auckland property and her cashed up super schemes.

Now she’s no longer working, capital preservation is the name of Talia’s game. She also needs her investments to generate enough income to top up her NZ Super pension. However, while she now has the time she doesn’t have the knowledge to invest her own money.

At just 65, Talia could easily continue living for at least another 30 years. To maintain her financial health during that time, she is going to need the right investment strategy. Diversification is a fundamental principle in any investment and the range of options available today is vast. Talia has met with an Authorised Financial Adviser who is providing investment advice and guidance through this process.

After completing an investment risk profile to see how much risk she is willing to take with her money, Talia’s adviser has recommended she invests in 75% safer bonds with a regular return and 25% in growth assets – mainly shares and property that will move around more in price but are more likely to give better growth over the long term. Bonds will give Talia the income she needs while growth assets will beat inflation over time so her money will continue to last for her lifetime.

Top tip: Not so long ago, $1,000,000 was considered a fortune, how-ever now it may only be enough for a comfortable retirement – make sure you factor the effect of inflation into retirement planning.

JEFF & NICKI are both in their late 40’s and are in the process of getting divorced. Jeff runs a family building company with his father and 2 brothers in Nelson. They have 2 teenage children.

Despite their impending divorce, Jeff and Nicki’s relationship has remained relatively amicable. They’re fortunate because they have the same objectives: to reduce their collective debt so they can become financially independent, to support their children and to work towards their retirement goals.

Jeff wants to invest into and grow his building business. Now that Nicki’s left, Jeff has had to temporarily take over her role of admin and accounts. It’s been a steep learning curve but he now has much a better handle on the finances. With this knowledge behind him, he can go ahead and employ someone to take over the admin role and get back to building and in-creasing revenue.

Jeff and Nicki are big believers in education and are committed to teaching their children about the importance of savings. So they’ve set up a joint savings plan which they will both contribute into, to fund their children’s education.

Although separating has been an emotional and financial roller coaster, this final step has been a very positive move forward in their divorce settlement.

Top tip: For many people, the best investment step they can make towards retirement is paying down a home loan or personal debt.

BEN & KEIRA are both in their late 30’s and have just moved back to NZ after living in the UK for the last 12 years. They have 3 children and have moved to the Wairarapa to take over the family sheep farm from Ben’s parents.

Ben and Keira are determined to have a much better farm succession plan than what Ben’s parents had.

Their priority is to invest in the farm, setting up the property for long term success while having off farm investments, giving them opportunities to divide their assets for the next generation.
So how can they reach these goals? Their farm succession plan could include purchasing rental properties or other farm land in an area less susceptible to the same climate conditions. They could look at in-vesting in shares or commercial buildings. If any of their children do wish to take over the farm property in years to come, they will have options for the non-farming siblings to receive their fair share of the assets.

Fortunately, Ben and Keira also have the option of transferring funds to NZ from the sale of their properties in the UK.

As with any succession plan, flexibility is important. People’s needs change, families grow and hopefully the farm business grows as well. These potential changes should be considered in the succession plan as Ben and Keira have time on their side to get this process right.

Top tip: Around 80% of the world’s businesses are family-owned. Having an open and transparent succession plan is key to a successful transfer.


This information is of a general nature and this is not intended to be personalised financial advice.

Source: RIVAL Wealth