Sunday 24th July, 2005

 

Double check and realign

 
 
 
 
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Earlier this month, a UK-based company, Inmarsat launched its next generation satellite over the Indian Ocean. This system promises to deliver 16 times the current capacity, and 25 times receiver sensitivity, in mobile phone, and Internet communications.

We cannot fail to recognise the power of alliances, in tomorrow’s market, and we must forge similar alliances with people in-the-know, as we begin implementation of plans for our own financial efficiencies.

Over the last three weeks we discussed the quality of the financial advisor with whom we would form these alliances to grow personal wealth.

We established that truth and honour are our entry doors and our exit doors and that we must seek out the “professional” advisor, with whom we develop a relationship of trust.

Now we begin the implementation of our personal financial plan. But let us recap the 14 recommendations thus far.

The first step was to assemble and organise all personal data in an ordered reference file.

Second, we sought to establish the various personal and family goals and objectives, over a ten to 15-year horizon. That also included the short-term goals and objectives, over the next 12 months.

A third and vital step is the identifying of the issues and problems that face the individual and family, immediate as well as evolving.

We had determined that it was necessary to write these down as a point of reference against which we can double check and realign, should we become despairing.

Individual net worth

As a fourth position, we saw the need to record the various assumptions which serve as background to the initiatives we hope to take. This would include an economic assessment of the current environment, and government policy. In particular: personal taxes, tax shelters, savings incentives and long-term fiscal directions.

Such assumptions will allow intelligent guesswork about currency fluctuations, inflation, and rates of return.

The fifth step was to establish individual net worth. We would record all debt, and liabilities, and all our assets. This part of the process can be very lengthy and drawn out, either because some people have little bits of assets in many places, here and abroad, or because some of us are simply ashamed to admit that we have nothing to show.

Another reason that this is a protracted affair is because many assets are not properly titled, and we cannot easily establish who is the rightful owner. Additionally, we have a tendency to keep our documents all over the house and office.

This is a truism!

Sometimes I wait two to three weeks for a client to locate a single document, simply because he can’t remember what he did with it. Sometimes the lawyer, the accountant, or the banker is holding the document, and the client cannot remember!

If you are serious about accumulating wealth, you had better establish a file, drawer, box, and a notebook, in a specific, secure place, for all your documents. And also store photocopies of those documents, in a different location—in the event of fire/flood etc.

Next we examined the intricacies of cash flow management.

This required a statement of the sources and uses of income, for the current year, and other relevant years. This exercise serves to focus the client on his own habits which reflect efficiency or wastage.

In an age when the Internet can capture and store information and give you access virtually anywhere in the world, almost at the speed of light in a vacuum, can we too get on board with our data, and set the stage to plan at phenomenal speed?

To be continued next week!

n Raziah Ahmed is a registered financial consultant.

 

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