Some of you will have been lucky enough to have been through this process with us and I have to say, we really enjoy the interaction this involves!
Our job is to ensure you can live the life you wish without running out of money in the process. Cash flow modelling is therefore an essential tool as it can illustrate where you are now, where you would like to be and what you need to invest to get you there – or how long your will money last.
This detailed picture of your assets includes existing investments, debts, income and expenditure. These are all projected year by year, using assumptions for the rate that your wealth will grow, rates of inflation, wage rises and interest rates.
There are some of you who will have a clear plan for your life but don’t know if you’re on track to achieve your goals. However, there are many of us who don’t have a long-term financial strategy at all. Others may have a goal, but no method of determining whether it can be achieved.
Without some form of financial model, it’s very difficult to make financial decisions about critical things such as:
- When can I retire?
- How much do I need to sell my business for?
- Can I afford to buy a second property or a new car?
- What level of investment risk do I need to take to achieve my financial goals?
- What level of tax will apply upon my death and my partner’s death?
The cash flow modelling can help you to answer these questions and assist Carpenter Rees in mapping out your personal financial planning landscape. The output from the cashflow modelling is easy to understand and, in many cases, it helps to provide clarity to our clients’ financial affairs.
Inevitably, there will be unexpected twists and turns along the way, so it’s necessary to regularly review the plan in order to ensure you remain on course. The cash flow therefore becomes the centre of your financial plan.
If you’d like to see an example of a cash flow model and how it works, please contact us and we can forward an example to you.