Designing and Constructing a Financial Plan
Constructing a financial plan is much like building a sailboat.
After creating the design and blueprints, a master shipbuilder constructs the deck and hull. This is the part of the boat upon which you ride. The deck and hull keep you dry and protect you from the dangers of the water. The deck and hull protect you from downing, from sharks or alligators, from unexpected storms and from other hazards of the sea.
Like a boat a well-crafted financial plan also requires elements of protection. The plan must mitigate risks associated with unexpected events such as death, disability, financial loss, legal problems and other potential catastrophic events. This “defensive” portion of your plan includes debt management, hedging strategies, budgeting, proper insurance coverage, legal documents and emergency funds.
Once the sailboat’s deck and hull is complete, the shipbuilder adds the masts and sails. It is the sails catching the wind which powers the boat through the waves of the sea. It is the sails which allow you and your boat-mates to reach your desired destination.
Once a financial plan is implemented, it is powered by harnessing the potential of a well-diversified portfolio of investment assets. Your personal investments augment employer pensions and government benefits thus allowing you to pursue your financial goals.