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Fundamentals of Financial Planning

From your perspective there are really only two services you can choose between when getting help with your financial arrangements, financial advice or financial planning.

We define financial advice as the recommendation of a financial product in order to achieve a specific objective or solve a particular problem. Our financial planning service is a dynamic, cyclical process aimed at assisting our clients to achieve their financial goals over the course of a lifetime.

We at RAY Alliance are fully aware that no two financial plans are the same, as all of us have different goals, value systems and risk appetites.

In RAY Alliance Financial Planning, we believe you should first consider your liquidity and insurance needs before investing your “free funds” to achieve your financial goals like setting up a fund for your children‘s education or for your own retirement.

  

The following sequence will help you to achieve your goals.

Liquidity Planning

to determine your “free funds” available for investments after the following liquidity needs are addressed:

  1. We believe you should have sufficient savings in a current or savings account, as an emergency fund to meet your monthly expenses for 3 to 6 months should all sources of income cease temporarily.
  2. In addition, you may want to set aside some savings into more liquid instruments for additional liquidity preference, capital repayment of loans or short-term goals with less than 3 years to go, such as a down payment for a car.
  3. Once your liquidity needs are addressed and provided for, the balance of your savings will be your free funds available for medium to long-term investments.

Insurance Planning

to ensure that all goals and objectives will still be met should any of the following adverse situations take place:

  1. It is important to ensure sufficient insurance coverage is in place to provide for protection against unexpected events. There are 2 areas you should make provisions for:
    1. Your income and treatment, should your income cease due to a major illness or disability,
    2. Your dependants‘ needs, in the event of your premature death.
  2. As premiums for protection policies are paid either monthly or yearly, these should be provided for from your monthly income.

Investment Planning

for your medium to long-term goals focussing on asset enhancement and taking into consideration the following:

  1. Once your liquidity and insurance needs are provided for, you should make your savings work harder for you by investing your free funds.
  2. Your investments should be consistent with your identified goals, your attitude towards risk and the time horizon of these future capital needs.