Financial planning is a continuous process and requires review at regular intervals.
By the time you reach 50, you may have learnt several financial lessons, and your personal balance sheet is the result of the decisions you made years ago.
Around this time, most of the people are in the process of achieving their important goals like paying their children’s higher education fees and marriage expenses.
So, is it time to stop worrying or looking at your finances?
No! As your most important goal of life - retirement is closer to you, and you should have appropriate strategies in place for the same.
Re-assess your risk profile and align your portfolio
When you reach your 50s, you have a better understanding of financial markets and products than the level of understanding when you have started investing in your 20s or 30s.
After almost 20 years of financial markets experience, your risk perception towards financial instruments may change, and you should re-assess your risk profile by completing a new questionnaire.
Once completed, you should start rebalancing your portfolio to align with the new risk profile.
At this age, the main focus should be on wealth preservation, and one should approach the systematic transfer of assets from growth-oriented schemes to income-generating investments.
Debt, assets and insurance
No one would like to retire with a big debt. It is the perfect time to relook at your loans and start planning for debt-free retirement as many of your old investments are maturing around this time.
You may consider using your lump-sum payments to reduce your debt burden.
Your insurance needs, debt and liquid assets position, go hand in hand, so it is important to complete new insurance needs analysis to ensure you do not pay high amount premiums (Over-insured) or lesser premiums (Under-insured). However, never try to overlook insurance at any stage of life as it provides mental peace to you and protects your loved ones if something unwanted happens.
Take out time and start discussing your estate planning with your spouse. Sit together and start aligning your views for nominations and other legal matters.
As said earlier, when you reach your 50s, you may have achieved many of your financial goals in the past with financial discipline.
It is time to look at your retirement goal more aggressively, and it is always best to approach a professional financial advisor to keep your financial planning on track. (Inputs from Pepper Content)