On 11 December, the United Nations marks International Mountain Day, an opportunity to raise awareness of the role mountains play in our climate and way of life.
As well as their important ecological function, mountains offer an exciting opportunity for climbers. Mountaineers around the world dedicate their lives to scaling these enormous peaks, often pushing the boundaries of what a human can achieve.
A quick glance at our website will show you that climbing a mountain isn’t just for adrenaline junkies though – the key principles that mountaineers follow also apply when creating an effective financial plan.
Read on to find out what you could learn from the world’s greatest mountaineers about growing your wealth and achieving your financial goals.
1. Having a clear goal is the first step to creating an effective plan
When climbing a mountain, your goal may seem self-explanatory. But other than reaching the summit and safely descending, you may have other goals you’d like to achieve. For example, perhaps you’d like to complete your mission within a certain time frame or on a significant date.
Having your goal in mind means that you can build a plan that enables you to achieve this safely. From training to ensure you’re in good physical condition to plotting a route to the top, each element relies on you knowing what you’re aiming to achieve.
Your goal is always the starting point for an effective financial plan, too, whether that’s retiring early, travelling the world, leaving a financial legacy for your family, or something else.
By understanding what you’re working towards, you and your planner can decide on the most sensible steps to take today that will allow you to accomplish this.
2. It’s vital to choose the route that’s best for you
There may be several different routes to choose from when climbing a mountain; perhaps some offer stunning viewpoints while others enable you to reach the summit more quickly. The route you choose will usually depend on your specific goals or the conditions on the day you’re climbing.
Similarly, the “route” you take to achieve your financial goals must be tailored to you. Factors that might influence how you work toward your goals include:
- Your goals
- Your circumstances
- Your attitude to risk and capacity for loss
- The time frame within which you want to achieve your goals.
This is why, even if you have the same goals as a friend or family member, the way you set out to achieve that goal might be completely different. So, don’t let others sway you into taking their route. Focus on your personal goals and the steps that will allow you to achieve them.
3. You may need to adapt if your circumstances or conditions change
No matter how carefully you plan your route to the summit, adverse weather conditions can develop quickly on a mountain. Moreover, you may find that your circumstances change.
For example, altitude sickness can set in quickly and affect your ability to continue with your route. As such, adaptability is key for continuing to make progress toward your goal if the climb doesn’t go to plan.
When managing your finances, a change in conditions or circumstances can happen at any time. Examples include:
- Getting married or divorced
- Stock market volatility
- Receiving an inheritance
- Changes to legislation
- Having a child or grandchild
- Inflation rising faster than expected
- An injury or illness preventing you from working.
When external conditions or your circumstances change, you may need to update your financial plan to account for this. Though your finances may not be at the forefront of your mind during major life events, it’s sensible to consult your financial planner regularly so that they can help you review your plan and amend it if needed.
4. Remember that the descent is usually trickier than the ascent
It’s a little-known fact that, of the 300+ people who have sadly lost their lives while climbing Mount Everest, the majority of these deaths occurred on the descent rather than the ascent.
As climbers rejoice at achieving the summit of the world’s highest mountain, they might start to let their guard down, leaving them vulnerable as they embark on the treacherous path back to Base Camp.
When you retire, you might consider that the most difficult part of your financial plan is complete – after carefully saving for many years, you’ve built a nest egg to enable you to finish working.
But in fact, the hard work might just be starting as you decide how you’d like to take an income from your pensions, savings, and investments. This is because you’ll need to balance your income needs for today – including achieving the lifestyle goals you’ve been looking forward to – with your needs for the future. Withdraw too much in the short term and you could increase your risk of running out of money later in life.
So, be sure to create a robust income strategy for your retirement and review this regularly with your planner. This could help you calculate a sensible withdrawal rate and provide peace of mind that your savings will last as long as you need them to.
5. A trusted guide can help you reach the summit safely
Climbing a mountain is rarely a solo activity – usually, mountaineers will team up with a trusted guide to help them train for their journey and keep them on track as they climb. Moreover, their guide will usually have specialist knowledge of the terrain and conditions, which may prove vital to ensure the climb goes smoothly.
This is where your financial planner comes in. As an expat, your finances might have an added layer of complexity. So, working with a specialist who understands the financial landscape here in Singapore as well as in your home country is a must.
To learn more about how we can help you manage your wealth and work towards your goals as an expat in Singapore, please get in touch.
