The National Bank of Indianapolis and Diamond Capital Management are pleased to offer dedicated Financial Planning Services. We have recently hired Deborah Baker, a Certified Financial Planner ™ with over 35 years’ experience in the financial services industry, to provide customized financial plans to our Wealth Management and Private Banking clients.
What Is a Financial Plan?
A Financial Plan is a tool used to provide an evaluation of one’s current financial situation. It enables one to identify, organize and prioritize financial goals and then outline steps needed to help achieve the goals now and in the future for retirement. The Plan can indicate whether one is on track to meet specific goals or if adjustments should be made to length of time working, spending, saving or investing to increase the probability of success in retirement years – essentially helping to make more appropriate financial decisions to achieve long-term goals. Financial Plan components include investing and asset allocation, saving for college, retirement savings and general insurance review.
What Factors Are Considered in a Financial Plan?
- At what age can I comfortably retire?
- Will I have adequate resources to fund retirement years, or is there a possibility of depleting funds?
- What is the best method of distribution of assets in retirement?
- Should I pursue consolidation of accounts for ease in planning?
- Do business succession issues need to be reviewed?
Why Should I Work With a Financial Planner?
- Become more educated regarding your financial future.
- Explore possibilities for retirement lifestyle.
- Address concerns and expectations regarding retirement.
- Determine how goals will be funded during retirement years.
- Identify issues that may interfere with future goals so that those can be better managed.
- Receive ongoing counsel and annual reviews.
How Is a Financial Plan Created?
An easy-to-understand report is generated based on information you share with your financial planner.
- Age, income, state of residence, dependents, planned age to retire and income desired during retirement.
- Present and future goals (e.g., travel, second home).
- Spending habits/cash flow.
- Asset allocation and risk tolerance.
Results will be reviewed with suggestions for greater chance of success discussed. Ideally, the plan is revisited annually for updates.
Financial Planning Best Practices
- Pay off debt (start with highest interest rates/consolidate if possible).
- Create Emergency Fund
- Amount should be three to six months of your take-home pay.
- Follow budgeting rule: 50/30/20 (50% = Needs, 30% = Wants, 20% = Savings -includes Emergency Fund).
- Be sure to maximize matching component of Employer-Sponsored Savings Plan, if available.
- Retirement needs guideline:
- At age 30, annual income saved.
- At age 40, 3x annual income saved.
- At age 50, 6x annual income saved.
- At age 60, 8x annual income saved.
- At age 67 (or retirement), 10x annual income saved.
Consider any future major purchases that may affect your budget and future finances.
- First Home: Suggested 5-10% down payment, and ideally, plan to live there for 5-7 years.
- Subsequent homes: Suggested 20% down payment.
- Follow 20/3/8 Rule (20% down payment/No more than three years financing/Monthly payment no more than 8% monthly income).
Younger investors can and should be more aggressive with investments; allocation should become more conservative with age (e.g., fixed income portion should equal age past 50 years). It is never too early to start saving. Always remember, it is TIME in the market and not timing!
Financial goals and personal situations vary between individuals. There is no one-size-fits-all plan. To make the most of your earnings, working with a Certified Financial Planner™ can make a huge difference. Our specialists at The National Bank of Indianapolis are ready to help and look forward to helping you meet your needs and exceed your expectations.