Ask Melanie | Ask Melanie: plan for your retirement
Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries. Send your questions to [email protected]
In our mid 40s the happy, or horrifying, realisation dawns that we've probably only got another 15-20 working years ahead of us. Even if we love what we do and plan to work well beyond age 65, most of us want that as an option not a necessity. That's wise given our ability to stay employed depends on factors sometimes out of our control, such as health, permanent shifts in the job market and the economy.
You are right to think about how you can improve your investing decisions. Most people make reactive, rather than proactive, financial decisions. They respond to what has happened rather than what may happen next. And something always happens next.
Making proactive decisions begins with working towards something. You might have short, medium and long term goals, such as educating your children, travel or retiring at a certain age.
As a starting point, sit down with your husband over a quiet dinner to talk through what's meaningful for each of you. Once you have identified even a few of the things that are important to both of you, and the time frames for achieving them, you are on your way to developing the framework of a financial plan.
The next step is to work out where you are now in relation to achieving your goals. Start with your balance sheet. Look at what you own, what you owe and the difference between them. Consider how much of that difference is represented by assets that are for personal use (home and car, for example) and how much is investment capital that can generate income after retirement.