Once you’ve started to enter the professional world, you’ll begin to realize the value of a dollar. You don’t just want to be hustling hard your entire life without actually thinking about how to protect your hard-earned assets. But, of course, one can never guess the security of economic conditions, so it’s best to take a proactive approach to this.
When the main aim of your investments is to secure the future, you have to understand that growing your wealth is as important as preserving it. You’ll want to be able to protect and preserve it, not just for your present generation but also for the future ones to come. With the right strategies, this is something that you can do successfully, even as early as the present.
Because what happens in the future is quite uncertain, it’s a reasonable idea to start thinking about asset and wealth protection and preservation today. So, you’ve come to the right place to get familiar with these ways.
- Start With Estate Planning
In the past, you may have thought of estate planning as one preserved only for multi-millionaires. This notion isn’t necessarily true. While it’s mostly them who first think about the importance of estate planning, even middle-class families are also catching up. Believe it or not, you have an estate. That bank account you have in your estate, even that tiny apartment you may have just purchased.
In essence, estate planning refers to the legal process of making an advanced plan of naming the individuals to own your assets when you die. A good estate plan can help ensure that all your plans will be carried out in the smoothest way possible when needed.
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This ‘good estate plan’ can be achieved by using an estate planning checklist like this one:
- Do an inventory of all your belongings or assets;
- Draft your estate plan by ironing out matters like who will inherit each asset, and with what proportions, who would be responsible for distributing your assets in your absence, and who should care for your minor children;
- Account for your family’s needs, like ensuring you have enough life insurance to cover their needs and write down your personal wishes and desires for your children’s and family’s care; and
- Get hold of an estate planning lawyer for sound legal advice to help you out with the legalities and technicalities of estate planning.
- Purchase Different Types Of Insurance Policies
Life insurance, health and medical insurance, and property insurance are only three of the many insurance policy products you may purchase from various providers. You may not think you need them now, but it’s wise to have coverage from those insurance policies.
It’s an added expense to pay for the monthly or annual premiums, but in the long run, those payments will be worth it in the event of an emergency. It can drain your savings when you have to take in out-of-pocket expenses for any trouble you’ll face.
When insurance policies protect you, you won’t have to fear spending for those out-of-pocket costs. You know you have that umbrella of protection to pay for the property damage or medical expenses you may incur.
- Diversify Your Assets
The bank isn’t the only place for you to put your savings in. It’s never safe to put all your eggs in just one nest. Instead, concentrating your personal assets and wealth in just one area puts them at an even greater risk. To limit this, diversify: place your assets in different types of investments.
If you’re unfamiliar with how to go about this, you can always give a financial advisor a call. Depending on your risk tolerance, they can guide you with the different investments to choose from. For example, you can spread your assets in various classes of investments, market sectors, and even geographical locations.
- Get To Know The Various Personal Liability Risk You May Face
For entrepreneurs, your business can be your man risk of liabilities. When you have creditors, you must protect your assets so that you won’t touch them to cover your business’ debts.
However, those business liabilities aren’t the only risk you may face. There are also potential circumstances that may lead to personal liabilities that can hurt the stability of your assets. Getting to know what puts you in a proactive position where liabilities relating to each circumstance will no longer be a shock to you.
Here’s a list of what those personal liability risks include:
- Divorce. This can threaten your financial stability as, depending on whether or not you have a prenuptial agreement with your spouse, the ownership of conjugal assets will be distributed between you and your spouse. Divorce proceedings can also be expensive.
- Vicarious liability. Depending on the laws of your local state or country, when your business partner or employee gets into an accident and gets sued, you may be liable too under vicarious liability.
- Auto accidents. You don’t have to be the one in the wreck for auto accident expenses to arise. For instance, if you’re a parent of an uninsured teenager who had an accident, you’re held liable to cover those expenses as the parent.
- Maintain And Preserve Your Corporate Veil
Even first-time or small business entrepreneurs must learn to maintain and preserve their corporate veil. For starters, this means having a separate bank account for your finances and that of the business. Never mix both. When the company has expenses and liabilities, the business’ bank account covers them without touching on your finances.
Other strategies to maintain a corporate veil include:
- Using the company name in all your business documents;
- Maintaining and updating corporate records; and
- Title all business assets in the name of the company, if possible.
Conclusion
You may have already heard of this: ‘the best offense is a good defense.’ This usually applies to competitive sports, but it can also apply to business and financial planning. Rich or poor, no one has the power to decide or tell what the future holds. Therefore, everyone must be prudent to protect their finances against future financial and economic uncertainties. Protecting your personal assets and wealth is something you can do successfully now that you’re equipped with the information you’ve just read through above.
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