Mid-year financial review: Getting your personal wealth management goals together

As the year progresses, it's crucial to take stock of your financial situation. A mid-year financial review allows you to assess your progress, identify potential roadblocks, and make necessary adjustments to get you closer to your goals. 

Regular portfolio reviews exemplify the importance of strategic asset allocation for long-term success in your personal wealth management in Singapore.

Importance of mid-year financial reviews

A mid-year review provides a timely opportunity to evaluate your financial goals and ensure you are on track. It is a chance to:

• Analyse your income, expenses, and investment performance to-date.
• Identify areas that may need attention or course corrections.
• Adjust your strategy based on changing circumstances or market conditions.

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Who should do a mid-year financial review?

For those with specific financial goals

A mid-year financial review is highly recommended for individuals who have set specific financial goals, such as saving for a home, kids' education, an emergency fund or the future. Taking stock at the mid-point allows you to assess your progress and make necessary adjustments to stay on track. If your savings or investments are lagging behind, you can course-correct by increasing contributions, reviewing your asset allocation where it makes sense, or lowering your overall expenditure. If you do not have a set-in-place plan, here’s how to get started.

For people planning their finances across life stages

Conducting a mid-year financial review is beneficial for people across different life stages. Those in their 20s and 30s should focus on long-term investments and retirement planning, while the “sandwich generation” in their 40s and 50s multitask their children’s needs, ageing parents, and their own retirement.

As retirement nears in the late 50s and 60s, a comprehensive review helps finalise decumulation strategies and ensure your withdrawal rates align with your life expectancy and market conditions. Even during retirement, periodic reviews are crucial to preserve wealth through low-risk assets.

When markets seem unstable

Uncertain market conditions, like the volatility witnessed this year due to rising interest rates, inflation, and geopolitical tensions, further incentivise the need for a mid-year financial review. This is not a call to react hastily, but rather an opportunity to assess and evaluate your financial strategies with a thoughtful approach.

Step 1: Quick wellness check

Evaluate your goals to ensure they align with your financial aspirations and horizons. 

What are your short, medium, and long-term saving and investment goals? Are you on track for your financial goals with your current lifestyle? 

Are you maximising your CPF contributions and exploring SRS top-ups to build a sufficient nest egg? It is important to evaluate if you are saving enough for retirement. Only 62.5% of millennials have retirement plans, while almost 2 in 5 (39%) Singaporeans worry about inadequacy. 

Step 2: Measure the adequacy of cash reserves

Having a sufficient emergency fund acts as a safety net to protect yourself against unexpected events like job loss, medical bills or other financial uncertainties. 

This emergency fund reserve should cover 3-6 months' worth of essential expenses, allowing you to weather temporary setbacks without jeopardising your long-term goals. Regular assessments ensure your emergency fund remains adequate for your current circumstances. For cash sitting idle, depending on your investment objectives and risk tolerance, consider Cash Smart Portfolios as liquid cash management options to grow your cash without compromising flexibility when funds are needed.

Step 3: Review your holistic wealth situation 

Evaluate your portfolio mix / asset allocation

Review the breakdown of your investment portfolio in totality. Assess if your current asset allocation aligns with your risk tolerance and goals. An imbalanced portfolio can expose you to unnecessary risks or limit potential returns.

Rebalance as needed

If your asset allocation has drifted significantly from your targets, consider rebalancing. Rebalancing helps maintain your desired risk profile while keeping your portfolio on track.

The auto-rebalancing feature on Endowus is one of our value-added, embedded services for clients. We do not charge any switching costs so you can stick to your target asset allocation aligned with your risk appetite — while maintaining a total view of all your finances in one platform. 

Examine the extent of diversification of your portfolio

Nobel prize-winning economist Harry Markowitz called diversification "the only free lunch in finance". Diversification across asset classes, industries, and regions can reduce portfolio volatility, thus achieving better risk management. 

Step 4: Review your debt situation

Review all your outstanding loans, credit card balances and other debts, especially those that you are obliged to pay off from mid-year onwards. Based on your income and expenses, you should:

1. formulate a realistic payment plan to tackle your debts systematically; 
2. prioritise paying off high-interest debt first, and;
3. automate debt payments to help you stay on track

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Step 5: Re-evaluate your plan

Evaluate how well you have achieved your financial goals up to this point. Identify areas that need improvement or adjustment. Life circumstances like job changes, family events or major purchases can impact your plan, requiring realignment. 

During the review, assess if your investment portfolio and asset allocations are still appropriate for your goals’ timelines.

For instance, approaching retirement may warrant reducing risk by shifting to lower-risk investments and the inflation rate and interest rates could be the factors that trigger a re-evaluation of plans. 

Step 6: Make necessary adjustments, with help if you need

If you find yourself falling behind on your goals, take a closer look at the reasons behind it. 

Was it due to habitual reasons or were the plans not actionable and sustainable to begin with? Understanding the root causes will empower you to make necessary adjustments.

Fortunately, there are options available to help you get back on track. Subject to your investment objectives and risk tolerance, Consider increasing your investment contributions to accelerate your progress. Deliberate on delaying major expenses to free up resources for your goals. And if needed, be open to revising timelines to ensure a more achievable and realistic path.

And you do not have to do it alone. If you are unsure about how far off you are from your set goals, you can engage our client advisors in many ways. 

What can Endowus do for you? 

By now, you should have the tools to conduct a comprehensive mid-year financial review. By the steps outlined above, you can gain clarity on your financial position, identify any issues or shortfalls, and make any necessary adjustments to get your finances on track for the remainder of the year.

Be disciplined in setting aside time for this important check-in. The effort you put in now will pay dividends by keeping you informed, in control, and on the path towards your financial goals. Conducting regular reviews will help you build positive financial habits. With a proactive approach, you can make this a productive year for your finances.

If you are stuck on any of the steps of a mid-year financial review, we advise you to hire a financial advisor to show you the ropes. 

Picking a financial advisor in itself can be tedious as you would want someone who would prioritise your financial health over any potential compensation they might receive. Fortunately, there are a few questions that you can ask financial advisor candidates that may help you narrow the list. 

Here at Endowus, we operate on an independent, no-commission basis, allowing us to always put you first.

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