Holistic Wealth Planning and You

With word emerging recently from the International Monetary Fund (IMF) that this year is being predicted to become a financially tough one with recession in the cards for about one-third of the global economy, this is the time to really begin reckoning with your personal finances. IMF chief, Kristalina Georgieva, told CBS in an interview that the reason for this bleak forecast is that "the three big economies, US, EU, China, are all slowing down simultaneously".

Moreover, she added, even for countries that are not in recession, "it would feel like recession for hundreds of millions of people". It was possible, she added, for the US to possibly avoid recession, but for Europe, hard-hit by the war in Ukraine, half the European Union would definitely be in recession. China, meanwhile, which is the world's second-largest economy, is still grappling with COVID and onerous restrictions have eased in December, though the economy is decelerating, finding itself out of sync with the rest of the world and still unable to resolve its supply chain and trade and investment issues. Even with the abandonment of restrictions, recovery will be, at best, erratic.

All this to say that we're in for a bumpy ride. Jamaica trades with the big three economies, and so what affects them will affect us. Where there is volatility in those economies it will of necessity reflect on ours. Amid all this risk and market volatility, it is key, now more than ever, to become serious in planning your finances — savings and investments — to not only weather the approaching economic turbulence, but also to ensure that your portfolio remains resilient despite personal bumps in the road in the future.

What is holistic wealth planning and how can it aid financial security?

Your financial security is always affected by various segments of your life at different phases. Holistic wealth planning seeks to find a way that's best suited particularly to you to grow and protect your wealth. As we've been stressing over the past weeks, investing is one of the best ways to grow wealth. But focusing purely on this alone may not be in your best interests. This is where holistic wealth planning comes in because what it does is join together all the pieces of your financial history to ensure that everything works efficiently, and one aspect is not working against another. So, for example, rather than just focusing on portfolio management, other areas like insurance, estate planning, etc, are taken into consideration as well.

Let's use a fictitious case study of Jane, an unmarried 40-year-old diabetic with a child in prep school. She is self-employed in a high-stress industry and her doctor has told her that she needs to adjust her lifestyle, eat better, and exercise. Jane says, "I'll do that one day. Right now, I have to get the bag." She is on top of her savings game and she has finally begun to invest for the long term, knowing that she has 20 years ahead of her kid's further education and for her retirement. She's a buy-and-hold investor, meaning she's bought stocks and bonds and will hold on to them for the long haul, at which time she can cash out with a tidy nest egg. She doesn't need her portfolio for income generation, as she's doing extremely well in her business, which has so much growth potential, the profits of which she regularly reinvests.

But Jane doesn't have a good insurance plan. She'd had one but lost it when she quit the corporate job she used to work at. Then she'd gotten pregnant just as her business started to take off and she'd taken out an inadequate life insurance policy, planning to eventually upgrade it. One day, she realises that she feels unwell. She goes to the doctor a couple days later when the feelings persist. Only to be told she's been in the throes of a heart attack, which presents differently in women than in men. She'll survive it but the operation will be costly and there's a long, hard, and expensive road to recovery ahead of her. She finds herself in somewhat of a pickle. Her cash savings aren't nearly enough but she doesn't want to sell her stocks now before they've begun to see any real and significant yields. Then there's the question of whether or not her health will rebound so that she can continue to take care of her child and herself in the way she'd been able to pre-health crisis.

If Jane had gone about managing her wealth in a holistic way, she would have not simply prioritised one component — buy-and-hold investments — but she would have gotten advice from a wealth advisor about the stable cash value of life insurance, maybe even an emergency fund, in her financial plan that wouldn't have put her portfolio at risk in the event of an unforeseen medical emergency.

Employ the services of a professional wealth manager, who will sit with you and get a comprehensive understanding of your lifestyle, needs and goals and recommend a strategy that will work for you.

Lamar Harris, vice-president, wealth management, NCB Capital MarketsRLA

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