Posted by Carmen Garcia

Five Tips to Protect Your Financial Wealth

Five Tips to Protect Your Financial Wealth

Accumulating financial assets in a tough and competitive world is hard work. Yet, no matter how much you have, there are sharks and potholes along the way ready to eat at your financial wealth.

The economy is full of uncertainties, the cost of living is rising, and with sharks all over the place, it is essential to look for foolproof ways to keep your financial wealth intact. We have the following tested ways:

  1. Keep an Appropriate Asset Allocation 

Based on your personal circumstances, it is essential to have an asset allocation. This simply has to do with separating the assets you can invest properly into cash, bond, and stocks. This is one of the advice all financial advisors will give.

Many factors affect the diversification mix you will use. Some of these are age and your level of risk tolerance.

If you are still years away from retirement, your best bet is to invest in equity. According to experts, you are better off with at least 60% of your entire portfolio. If you, however, have less time to retire, consider fixed investments such as money markets or short term bonds. 

  1. Don’t Stop Buying Because of a Downturn 

While buying when every other person is selling does not make sense, it is the secret of some of the most successful investors we have. We understand that this is unfamiliar and risky territory. This, however, comes with fantastic buying opportunities called "dollar-cost averaging."

The idea behind dollar-cost averaging is to dedicate a fixed dollar amount every month to an investment. This happens without regard to what the share price is saying. If you can keep up with this, you will have a lot of shares to buy when prices are low and fewer shares when prices are high.

If you keep this regular buying up for a while, the entire amount you dedicate to security is spread out. As a result, you get some protection against market price fluctuation. 

  1. Try and Reduce Income Taxes

For every income you make, you need to send some portion to Uncle Sam. Yes, it sucks, but that’s how it is. However, the strategy is to look for legal means possible to limit the amount of money you send to Uncle Sam. 

With this in mind, take all deductions that apply to you when filing your tax. Also, whatever you invest in your 401(k) is tax-deferred. The taxes on those incomes will be postponed to when you start making withdrawals when retired, except there is a Roth IRA.

  1. Wait for Social Security Benefits 

Social Security benefit is one of the few streams of income you have that can help you withstand market uncertainties. You can employ some strategies to make your Social Security benefit last. 

Waiting till you are 70 years old, for instance, will ensure you get the most return from it. For married couples, it is recommended that the person earning the most delay the collection of their own benefits. This will increase the payout to the partner.

Also, taxes on Social Security could be unfair at times, especially when withdrawing from IRAs. This is why we advise making provision for both Roth IRAs and traditional IRAs as it can help reduce the impact of the tax. 

  1. Get insured

While we do not plan and wish for disaster, it is sometimes inevitable. You could live a cautious life, but what about unforeseen contingencies and the act of God. This is why you need some form of protection in the type of insurance.

You can insure yourself in many ways: life, homeowners, liability, medical, and vehicle. This way, should there be any unplanned event; your financial security will not be jeopardized. There are insurance plans that come with various details and limitations, but they are good options to consider.

Concluding Remarks

Without a doubt, the safety of your financial wealth is primal to good night sleep. Do all you can to abide by these investment strategies. It will go a long way in protecting your finances against unforeseen contingencies.

Carmen Garcia
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