In the sixth and final installment of her investment 101 series, Sheryl Sutherland discusses the importance of portfolio monitoring and asset protection.

By Sheryl Sutherland

In my last article we looked at appropriate asset allocation for your age, risk profile and investment goals. Previous to that, I presented an overview of the different types of investments and considered the upside and downsides of the various asset classes.

Once you have implemented your financial plan, you need to assess your progress. This is step six: Portfolio valuations should be undertaken regularly – annually is a good time-frame. During a year your portfolio can fluctuate: dividends or interest may have accrued, inflow or outflow of cash may have caused the asset allocation to vary. For example, if the share market rises, the weighting in shares may rise above your predetermined range. This is a good time to re-examine your goals. Have they changed? Are you still on target to meet your existing goals? Re-examine your exit plan if you have one (and you should). Does it suit your current circumstances?

Step 7 - Protect your Estate

There comes a point in everyone’s life when preserving assets for a future generation or for charitable giving becomes as important as building those assets. Just as a sound financial plan helps you and your family during your lifetime, an estate plan can help provide for your loved ones after your death. Today estate planning is not only for the very wealthy – almost everyone can benefit from creating some type of plan.

First, discuss your estate and financial situation with your family. Assess, with your legal advisor, which form of property ownership is most suitable for you. Preparing a will is essential. A will is a legally executed document that states how your property is to be distributed after your death. A proper, enforceable will ensures that your assets are distributed according to your intentions. You should also appoint a guardian to oversee the interests of any minor children and an executor to administer your estate. If you die without a will the courts divide your assets according to the law. You should also consider arranging power of attorney in case of incompetence, a living will, organ donation and charitable giving.

Consider Personal Trusts

There is no doubt that personal trusts are useful legal vehicles that can assist with financial and estate planning.

Trusts can help to:

• Simplify the settlement of your estate.

• Avoid lengthy and expensive probate (a process whereby the courts issue a certificate clearing the way for the division of your assets according to your will).

• Protect your family’s assets.

• Preserve assets for heirs in accordance with your wishes.

• Ensure the uninterrupted management of assets should you die or become incapacitated.

• Use tax-free life insurance proceeds to pay tax, if estate tax is reintroduced.

If you decide to create a trust, select the trustee with care. A trustee must be able to provide prudent asset management, keep reports of the trust investments and distributions, prepare tax reports and serve as an impartial arbitrator in balancing the needs of all the trust’s beneficiaries.

Exit strategy

Any business owner should have a succession plan. This may mean that you sell the business, transfer it during your lifetime or you may leave it to someone in your will.

Consult a Professional

Developing an estate plan can be a complex task and errors may mean that your wishes will not be followed. The creation of wills and trusts should be left to your lawyer.

*Sheryl Sutherland is director of The Financial Strategies Group and co-author of Smart Money,  and author of Girls Just Want to Have Funds and Money, Money, Money, Ain't it Funny.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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7 Comments

This should help all those who demand a lower value Kiwi$, to understand they are wrong...dead wrong.
http://globaleconomicanalysis.blogspot.co.nz/2012/09/bernanke-declares-war-on-canadian.html

Wolly,
It hasn't helped me reach such a conclusion at all; quite the opposite. That money printing by most of the world is for most of the countries taking part, about competitive devaluations, is exactly the reason why staying on the sidelines is very destructive to our economy; as it probably is to Canada's.
See the following:
http://www.reuters.com/article/2012/08/30/canada-economy-account-idUSL2E8JU1DW20120830
Looks remarkably similar to our story.
Even then, Canada has at least put in place some capital controls to stop the flood of other countries foreign reserve manipluation coming in and affecting them. We are totally just playing possum in the headlights.
Which bit of the article put you off doing something?
 

And Wolly, here's the US current account deficit, improving significantly.
http://www.reuters.com/article/2012/09/18/us-usa-economy-currentaccount-idUSBRE88H0N520120918?feedName=businessNews&feedType=RSS
Do you really think currency does not have anything to do with export competitiveness? Canada and the US are two perfect examples.
And remember that the current account deficit by definition is equivalent either to our increased indebtedness, or loss of ownership. So jobs and wealth lost.
Borrowing $200 million a week is a very expensive way to have cheaper petrol.
 

From day one I have been against the govt borrowing to buy political support with their 'infrastructure investment gambit'

I have always regarded slashing the ocr to pork fake growth on the back of a currency value drop and cheaper credit for longer, as a total bit of stupidity...this is the bit I had hoped you would run into...
"It would also send the price of a litre of gasoline and a week's groceries through the roof - food and fuel have gone up 35 to 40 per cent in the countries that are playing the "print and hope" game -- and anyone living on a fixed income, or anyone planning to collect their pension, would be in deep trouble. It's hard to live on zero interest.
Read more at http://globaleconomicanalysis.blogspot.co.nz/2012/09/bernanke-declares-war-on-canadian.html#yJT4RX5PoYlpyEGJ.99

sore-loser, click on the link to see the riots in Spain live
http://www.livestream.com/spanishrevolutionsol?utm_source=lsplayer&utm_m...

And this is the Telegraph on the riots. the best photos start at abot number 7 and up
http://www.telegraph.co.uk/finance/financialcrisis/9566520/Spanish-auste...