Just For Thinking
The Golden Formula for a good financial planning
Good Financial Planning = Saving + Insurance + Investment
Read? Saving, Life Insurance and Investing - 2nd Revisit
The degree of importance for these three components: saving, insurance and investment will change during our life time.
Once our kids are working and independent, do we really need to have to save more? We will need to remind ourselves that we only LIVE ONCE so we should be spending our money on ourselves. Right?
Insurance is actually a hedging tool to hedge against human asset and human liability. Once we don't need to support any dependents, we don't need to hedge against human asset; but we still need to hedge against human liability. It has become even important when we are older and a bigger medical insurance coverage is needed. Basically, it is decreasing the hedge in human asset but increasing the hedge for human liability.
Investment strategy should also change. When we are retired, wealth preservation and maintaining cash flow to support our preferred lifestyle could be the right investing goal.
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