Why a wealth check could be good news for your finances (and your health)

It’s not unusual to go for a health check if we feel something is not quite right. But maybe we should adopt a similar approach with our wealth, and also afford it the scrutiny it deserves to improve our financial outcome and ensure we sleep soundly.

Perhaps it’s time to think about wealth differently – to take a more proactive stance. We know our health won’t be optimised without some intervention on our part; likewise, very rarely can we just leave our wealth to its own devices and hope for the best.


The power to get better


In the same way that a niggling injury, lack of exercise or poor diet can affect our health, there are also factors which can diminish our potential to optimise our wealth for the long term.


When we are not feeling great we may take steps to improve our situation: a course of medicine, some rest or a period of detoxification. We can also measurably improve our financial condition if it is not what it should be.


Often what stops us is ourselves. We may be beholden to the power of our mind – numerous biases can impede our financial progress – and therefore the impact of status quo bias, loss aversion, overconfidence and more can have a meaningful effect on our outcomes.


Self-diagnosis can go some way towards addressing the issues, and to help you to set out a plan that could make a material difference to your financial health.


Identifying an impaired plan


A little investigation could reveal an ‘impaired’ plan for your long-term wealth, factors which hold our investments back and prevent them from performing as they could.


- This could be investments which are not sufficiently diversified. Just as we are encouraged to embrace a balanced diet, we should also invest in a suitable mix of asset classes and geographic regions to ensure our finances are in tip-top shape. This combination may be a blend of stocks, bonds and other assets, but crucially, it should be the right mix to help you mitigate losses during periods of underperformance, while helping you to achieve your individual goals over the long term.


- Perhaps you are not exercising your money as hard as you could. Similar to not looking after our physical health, if our savings are not put to work they will also decline. This erosion is due to the persistent effects of inflation, and we explain why even relatively muted inflation can have a tremendous negative impact on your finances over a number of years.


- Another relentless drain on our finances could come from paying an unhealthy amount of fees each year – even 1% more extra each year adds up significantly in 10 to 20 years. This can drastically affect how much you have free to spend over your lifetime, a shortfall that could also continue in retirement.


We should recognise, too, that investing can be stressful on our mental health. It’s never easy to deal with volatile markets, especially if our concerns are heightened by emotive media commentary. Yet it is easier for anxious investors to cope when you know what some of the root causes of your worries might be.


Prevention is better than a cure


A timely intervention is better than a costly cure. There may even be an “intrinsic link between financial planning and improved mental and physical health”, as this International Adviser article reports. After a little analysis of your own circumstances, therefore, you may feel you should take the opportunity to address the health of your long-term investments and retirement plans. It’s never too late to start to put things right.


Our Retirement Health Check tool (which you can access by registering) allows you to quickly assess if you are on track for a financially healthy retirement. This is just one of a number of powerful online tools that can give you a clearer view of how your finances could unfold, allowing you to account for a range of permutations such as tax rates, risk level, contributions and withdrawals.


And if you have some questions, our expert team are on hand to give you the professional advice you need – just get in touch.



Please note, the value of your investments can go down as well as up.

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