Tue. Oct 26th, 2021

Having a detailed financial plan provides you with a roadmap for making practical financial decisions in all aspects of your life. A financial plan gives you the best chance of success in achieving your life goals and your long-term financial security. Here are 10 important reasons to have and follow a financial plan.

1. Setting goals

A financial plan allows you to identify and prepare for any goals you may have in the future. This can be from buying a new car, travel aspirations, family needs, education or any other future cash flow event.

2. Emergencies

People must have a sufficient emergency savings reserve to provide for any unforeseen or unavoidable event. The general rule is that at least 3 months of income must be stored during a “rainy day”. Financial planning involves being prepared for these situations so that primary goals are not affected. Providing security to your family is an important part of financial planning and, as the old saying goes, “prevention is better than cure”.

3. Retirement

Retirement planning is arguably the most important aspect of a financial plan. Recent research in South Africa suggests that only 6% of people can retire financially independent. Much of this weak statistic is the direct result of people not having any retirement plans. A retirement plan provides visibility into where you are heading, what lifestyle you can afford, and how long your retirement savings will last.

4. Taxes

An important part of formulating a financial plan is to structure investments and income in a way that mitigates taxes as much as possible. A small tax saving can make a substantial difference in the long-term sustainability of your investments. A qualified financial planner can help you target and structure your investments in the most optimal way.

5. Inflation

Inflation is the main destroyer of purchasing power and must be taken into account within a financial plan. Assuming an inflation rate of 6%, the purchasing power of 1,000,000 RW today will be reduced by half in 12 years. With a detailed financial plan, you will be better prepared to deal with rising inflation in the future and limit the risk of experiencing a cash or income deficit.

6. Risk planning

A detailed financial plan involves setting up measures to protect your income, family, dependents, and financial well-being. A financial plan also helps identify the level of investment risk required to provide a particular lifestyle and for that lifestyle to be sustainable.

7. Wealth planning

A financial plan helps people understand the various tax implications that can be paid in the event of death and how quickly their dependents / beneficiaries will have access to the money. An estate can take up to 18 months to complete if it is not structured properly, which could leave dependents in a precarious, cashless position while assets are frozen on the estate. A financial plan will help you structure local and foreign farms optimally for profit or for your beneficiaries / dependents.

8. Liquidity

Liquidity means having access to enough cash to meet your financial goals and obligations (such as your monthly living costs). A good financial plan will ensure that you have access to enough cash during retirement, in financial emergencies, as well as when you die (for your family). Individuals need to make sure they have a good balance between liquid assets (cash) and non-liquid assets (retirement funds) so that income can be structured in the most fiscally efficient way. Liquidity ensures that there are sufficient funds available to supplement your goals, any unforeseen costs or tax obligations that can be paid without having to sell a fixed asset.

9. Investment strategy

It is essential to compile an investment strategy that matches your personal risk profile and supports your long-term goals. The strategy should incorporate the right balance of risk assets, such as equity, bonds, property, cash and offshore, to ensure that the desired return profile is achieved.

10. Partner with a qualified financial planner

Appoint a qualified and experienced financial planner to build and oversee a complete customized financial plan. Make sure the Financial Planner has a reliable planning process, regularly reviews your plan, has a security assistance team, and is registered with the FSCA.


At Investonline we have developed the most advanced financial planning process that one of our qualified client portfolio managers can create for you. Without a good financial plan in place, you are basically driving without a clear direction of your final destination. Once you have created a financial plan, the next step is to implement the financial plan and review it annually to make sure you are on the right track. Any changes in your personal circumstances must be taken into account so that the plan can be adapted accordingly. Investonline has a team of qualified customer portfolio managers who can guide you through the process.

How Investonline can help you with a financial plan

  • We can have a 15-minute introductory video or a phone call to introduce ourselves and answer your initial questions.
  • You can then provide us with relevant information, such as your financial goals and existing investments. It can be provided by online questionnaire, email or fax.
  • Then we can do a 60 minute financial planning session where we share our screen with you and model your financial future and different scenarios together.
  • After the session, you will receive a complete financial planning report with details of the scenarios developed.

Check out our digital financial planning video below:

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