Plan your finances: How to set financial goals

 Commissions and Diversification

Beyond planning how much to invest and the time frames, it is important to take into account the diversification of our assets and the expenses and commissions that we incur to maintain our assets. Diversification is important as it helps mitigate the risk and volatility of any asset. By planning a good distribution of assets (by classes, geographies, currencies, etc.) we can ensure that no unforeseen isolated negative event can have an excessive impact on our assets.

It has been shown that the impact of the commissions we pay for our investments can be very significant, especially in the long term. We tend to underestimate its importance since it represents very little in percentage terms, but its long-term effect can be very relevant.

Be prepared for emergencies

If we know anything about the future, it is that it is uncertain. Life takes many turns and at any moment we can suffer unforeseen events. Having an emergency fund to calmly survive turbulent periods is a cornerstone of any long-term financial plan . An emergency fund must consist of immediately available money, which does not vanish when we go for it (for this reason it is not advisable that it be invested in equities or anything whose value can fluctuate). The most frequent instruments for an emergency fund are usually cash in accounts or very short-term deposits.

The most important thing about an emergency fund is that it covers a sufficient period of our expenses to give us the peace of mind that in case of need (for example, a dismissal or unforeseen leave) we have enough time to react and normalize our situation.

Conclusion

Creating a financial plan can be tedious, forcing us to face realities and difficult decisions that we would rather put off. But much worse is not having any forecast and ignoring reality. With an accurate analysis of our finances, and a strategy to achieve our goals, we can take the appropriate steps to achieve good economic stability in our lives.

These data are for informational purposes and should not be interpreted in any way as a recommendation to buy or sell, or to make or cancel investments, nor can it serve as the basis for any type of decision on current or future investments. Self Bank is not responsible for any damages that the investor may suffer as a result of the use of said information. The Client is responsible for the investment decisions that he adopts and for the use that he makes of the information provided for this purpose. Self Bank provides this information through a provider and does not assume any commitment to update the content of the information presented. Past evolution or results of investments do not guarantee future evolution or results.

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