Managing your finances to create the lifestyle you really want can be tough. There is so much to think about – different investment options, the economic climate, not to mention your own income and existing financial commitments – that the task of planning for your retirement can become overwhelming.
What’s more, the advice you may have heard or read in the media can be confusing and even contradictory, leading you to fight your own cognitive bias as you try to select the right course of action for you and your family.
You might be feeling like you’re going round in circles trying to find the answers to your questions. But what if it’s not the answers that are leading you astray? Could you find what you’re looking for by asking a different question?
The wrong questions can create confusion and hinder your wealth accumulation
It’s easy to be influenced into asking the wrong questions when approaching your financial plan. The media, friends and family, and generic rules of thumb don’t tend to factor in individual circumstances, and this can mean that you follow unsuitable advice about how to invest and save for your future.
As well as potentially using the wrong products for your circumstances, the questions you’re led to ask about your financial plan can even trigger cognitive biases like loss aversion, recency bias, and fear of missing out. These biases are hard to spot in action but can easily cause significant damage to your wealth if left unchecked.
The sorts of questions that can lead to these problems include:
- Where is the stock market heading in the next few months?
- How can I maximise my returns in the short term?
- Should I invest in the latest trend?
- Is now the right time to buy or sell a particular investment?
- Is now a good time to keep my money in cash?
Questions like these don’t usually lead to sensible financial decisions that benefit you in the long term. Instead, they can end up leaving you feeling anxious and acting on short-term emotions.
Of course, making decisions about your future when you are so emotionally invested in the outcomes will always be tough. Sometimes, it is the external perspective of a financial planner that provides clarity as much as the answers they can provide or the advice they give.
7 helpful questions that could provide clarity on your financial plan
While asking the wrong questions can create anxiety and lead you further from your goals, asking the right questions can help you to do the opposite: find clarity and calm as you take steps towards your desired lifestyle.
Usually, the right questions will redirect your focus away from financial products and towards the practical steps that will give you a much greater chance of achieving your goals.
As with virtually everything in financial planning, your personal circumstances will mean that the specific questions on your list will vary, but below is a short list that you might find helpful:
- What are my long-term financial goals, and how does this decision impact them?
- How will this decision affect my ability to reach or maintain financial independence?
- What is the historical performance and volatility of this asset?
- Can I hold onto this investment for the long term, even in market downturns, without panicking?
- What impact will this investment choice have on my all-encompassing financial strategy?
- What upcoming transitions am I likely to go through that impact this decision?
- How will this decision affect those who are financially dependent on me?
A financial planner can help you to gain a fresh perspective
Working with a financial planner can help you to gain a fresh perspective on your goals and to start asking the right questions about what you should do next in your financial plan.
When you ask the right questions, the answers will give you the confidence to understand your next steps. They will also enable you to weather any storms that come your way, such as market volatility or an unexpected change to your financial situation. You’ll be able to make the right decision for you and have the potential to create better long-term outcomes for yourself and your family.
Get in touch
If you’d like some help asking the right questions to allow you to achieve your long-term goals, we can help. Either contact your financial planner directly, email us at hello@ascentawealth.com or fill in our online contact form to organise a meeting and we’ll get in touch.
