What are the best tips for strategic financial planning?

Speaking with a financial advisor can help an individual determine the best retirement asset allocation.

Strategic financial planning is a detailed process that investors use to plan for their retirement. While there are many viable methods available to achieve these goals, experts in the field have determined that there are essentially three keys that will determine overall success in most cases of strategic financial planning. The first key is to invest in commodities that will increase steadily over a long period of time. The other two factors may surprise you: Start investing early and get out of debt as soon as possible. Each of these factors plays an important role in building financial wealth over a lifetime, and delaying any one aspect can easily result in a much less comfortable retirement.

Whenever investors think of strategic financial planning, the first thing that usually comes to mind is the stock market. While there is a lot of money to be made on US Wall Street, experts agree that much of a person’s overall wealth at retirement age often comes from many other sources. Owning real estate has always been a highly profitable venture, and commodities like gemstones and minerals have been statistically equally profitable. Dividing an investment portfolio into many different areas is perhaps the easiest way to build wealth in any economy.

The age at which an investor starts thinking about strategic financial planning also plays a crucial role in their average retirement age. If a mere $20 US Dollars (USD) were set aside weekly for 20 years and received an average interest of 10% per annum, this would represent a total of $188,200.00 (USD) saved. Double that equation to 40 years and the net savings would jump to $506,300.00 (USD), which would be a comfortable amount for many middle-class families to retire. Compound interest can be an investor’s best friend or a borrower’s worst nightmare.

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Perhaps the most crucial aspect of strategic financial planning is doing everything possible to avoid paying high interest rates on long-term loans. For example, if a $200,000 (USD) home was purchased at 7% interest on a conventional 30-year loan, the homeowner would end up paying $479,016 (USD) if each payment was made on time. Since the average family buys two to three homes in a lifetime, it would be relatively easy to waste $1.5 million on interest alone, once all homes, vehicles, credit cards, and other lines of credit are factored in. Remaining debt free is a big part of strategic financial planning that opens up many great investment opportunities over a consumer’s lifetime, so it should always be the highest priority whenever physically possible.

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