In many ways, effective personal wealth building is similar to corporate planning. For instance, it’s important to start by setting measurable short-, mid-, and long-term goals.

Short-term goals may include:

  • Family vacation
  • Second home purchase
  • Lifestyle purchases such as a boat or high-end vehicle
  • Funding a child’s education

Mid-term goals may include any of the above that are projected out five or ten years into the future.

Long-term goals usually revolve around retirement and estate planning. The biggest question for retirement is deciding whether you intend to maintain your current lifestyle when you are no longer working full-time. If the answer is yes, then consider:

1. What expenses will remain essentially the same?
These may include food, entertainment, vacations, utilities, and possibly mortgage.

2. What expenses may increase?
Medical and travel are common items in this category.

3. What expenses are likely to decrease?
In some cases, mortgage may be in this bucket as properties are gradually paid off, or as children leave the nest and you choose to downsize your dwelling. Clothing and eating out expenses often decrease with the reduction of work-related meals and clothes.

Long-term estate planning can be even more complex. Questions include:

4. For how many generations do you want your wealth to last?
Your children may have obtained a high-quality education and may be on their way to significant wealth in their own right. How do you want to organize and plan the family’s aggregate wealth?

5. How and when do you want your wealth divided among your family?
What are the rules you will put into place to ensure that distribution during your lifetime and beyond is fair and according to your desires? Will investments in family members be earned, or given? Who will benefit and at what levels?

6. What about friends and extended family?
As your wealth grows, so do the requests for investments in other organizations and initiatives. How will you decide whom to support? Do you have guidelines in place to ensure your wishes are carried out and avoid sowing discord among your network?

7. What provisions do you need to put in place for the young, elderly, or disabled members of your family?
Even the wealthiest families often face difficult decisions about loved ones who may not be able to provide for themselves. How will you structure trusts and other resources to ensure your loved ones are cared for in the way you choose?

8. How much control will each member have over their portion of the wealth, and when?
Will the same rules apply to every family member, or have some earned the right to more control sooner? Who will make these decisions in your absence?

9. How can you protect your wealth from excessive taxation?
Every time money changes hands there are tax implications. Fortunately, there are many ways to protect your legacy from unnecessary attrition. What must you put in place to keep your wealth intact?

10. Are there charities you’d like to benefit from your estate?
Many wealthy individuals choose to leave a charitable legacy with an academic institution, a cherished charity, or a non-profit organization such as a church. How you structure this impacts the long-term benefit of your gifts as well as their effect on your estate.

With a list of your short-, mid-, and long-term goals in hand, the next step is to assign monetary values to each one, so you have a clear picture of the financial state you must achieve in order to meet your goals.

Kanaly Trust understands that trying to determine your goals and implementing a plan to reach them can be challenging. That is why our team of trained experts is available to help you build and manage your personal wealth.

Disclosures

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the Funds or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts.

There are risks involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks as well. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than investment-grade securities, due to the speculative nature of their investments. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.

Diversification may not protect against market risk. There is no assurance the objectives discussed will be met. Past performance does not guarantee future results Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index.