Financial Planning Opportunities For 2021

Financial Planning

The pandemic came with many lessons. Ask any of your friends, and they’ll tell you that the Covid-19 era taught them the essence of maintaining good health, a good financial planning mechanism, and the need to remain prepared for the future.

From the sharp economic slowdowns to the enduring market volatility, the 2020-2021 era highlighted the real role of financial planning in helping investors and employees alike on the essence of investment management.

You can work with your financial planner or financial advisor to learn more about wealth management and conduct estate planning, education expenses, tax planning, charitable giving, gift-giving, and career planning to set yourself up for success with your capital your portfolio.

Here are the financial planning opportunities for 2021.


Portfolio Positioning is a Critical in Personal Financial Affairs

Most of the people that traded in the economic sectors with high valuations like the tech stocks have a testimony to tell on the importance of enhancing your portfolio positioning and the essence of attending to any pending portfolio exposures. 

Similarly, the post-2008-2009 era clarified that growth could outperform value in economic sectors with high valuations. 

The post-2020 period has presented a scenario in which imminent shifts in financial planning have remained uncertain. But, remember, most economies (even the superpowers) are doing everything they can to pull out of the coronavirus-induced slowdowns. 

However, the entities that invested in portfolio planning and value-oriented operations have endeavored to farewell.

This is a crucial aspect of the world today. Many are under the notion that they can not protect themselves in market downturns or that there is no place to hide when it seems like the foundation of the very earth is falling beneath you.

But that is far from the truth as one can carefully position one’s portfolio to preserve their wealth even in times of elevated valuations.


Cash Management Strategy Evaluations

Cash management has occupied a significant place in the financial planning space. 

It will remain a prudent idea to maintain an effective cash management strategy in 2021, considering that millions of businesses across the globe are struggling with zero yields, with the performance curve being predicted to stagnate at this level for the foreseeable future.

This is the opportune moment for organizations (particularly startups) and individuals to ensure they embrace prudent cash management operations.

One way to embrace a sustainable cash management strategy is to respect the FDIC/NCUA limits when dealing with cash balances and to exploit alternatives in instances where you’re warranted to avail protections.

Indeed, cash may be looked down upon in a world that may have less yield but remember that your financial planner will note that cash provides optionality. 

The value of cash is that it presents the ability to go into various positions when the time is right.


Discuss Health Insurance With Your Financial Planner

The pandemic has presented a series of lessons on the importance of subscribing to a health insurance option. 

In essence, coronavirus has made it real that medical emergencies and other critical sicknesses can drain your bank account to the last penny and affect your ability to meet the exemplary financial goals you set every year.

Health emergencies and issues may affect your financial position by increasing your expenses and limiting your income by reducing your earning ability. 

Further, it can also place you into debts and prevent you from meeting your tax obligations and other factors similar to tax burdens that are a part of life.

Such issues reveal the extent to which buying a health insurance cover can be a crucial element of your financial planning journey.

The health insurance policy you subscribe to will help you meet your medical expenses, which may drain your bank account immensely. 

It could be everything you will need to meet your family’s health care expenditures in case of reduced or loss of income and accord you the opportunity to continue with your investment and savings pursuits as you had planned.


Talk about RMD/QCD Planning with Financial Advisors

Don’t be tricked by the American Rescue Plan’s silence on required minimum distributions (RMDs) if you want to be prudential with your financial planning operations. 

Remember, the waivers for RMDs in the United States were short-lived as they commenced in 2021 in full effect. So if you managed to maneuver your way through 2021, it is the opportune moment to reevaluate how RMDs will affect your cashflows and tax plans.

This is the time to reconsider adopting year-end RMD withholding as a strategy of replacing your quarterly tax estimates (particularly if it will be more than the tax payments you will be obliged to make). 

Also, be keen to include qualified charitable distributions (QCDs) as a key element of your financial goals any time you want to offset your RMDs. 

However, it could be a great idea to wait until there’s a lot of clarity on the government’s tax policy and its long-lasting effects on itemized deductions if you consider QCDs as your option.


Discuss Mutual Funds with Financial Advisors

You won’t forget talking about mutual funds any time’ financial planning is discussed. Mutual funds include all professionally managed investments in a range of asset classes. 

For example, they may include valuable metals (particularly gold), equity, and debt. Mutual funds are meant to meet both your short-term (from 1 month) and long-term (to more than ten years) financial goals.

Similarly, mutual funds will grant you the opportunity to choose from multiple investment schemes that will avail you of different return margins and risk profiles. 

The allocations you get on your mutual fund’s investments could come in handy when you want to attain your financial goals later in 2021.


Focus On Return of Capital and Estate Planning

Many clients might wonder about how they can increase their income or obtain more from their assets in the market. This may incentivize them to want to eschew risk mitigation in favor of more interest in their investments.

While it is a fantastic idea to transfer assets that may provide more interest and yield, it is necessary to note that overall estate preservation is necessary. 

For instance, the risk may not always yield higher returns. Instead, it may cause many clients to lose their principal and notice a decrease in overall assets.

The gift of proper planning is that it can help to bring about more interest from different types of assets without taking on excessive risk.

Clients who take advantage of the right strategies in their various accounts and practice proper personal finance in a risky environment such as the one we find ourselves in today can preserve their money and access a better future.