How to protect your wealth

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May 11, 2020

Making the right investments, earning your worth and getting your finances in order can be hard enough, so it’s worth ensuring that they stay that way. Learning how to protect your wealth is an important part of that.

Whilst right now, you may feel like your hard earned cash is safe as it is, learning how to shield and preserve your wealth will benefit you in the future. 

Life can throw you some unexpected problems a prime example is the current situation we are all in. The value of full, protected financial security can be priceless. 

In this blog post, we will talk through five simple ways that you can start protecting your wealth today.

We will cover: 

  • Knowing how much and where it is
  • When and why you should increase your liability insurance
  • Putting your money into long term bonds
  • Separating your finances
  • Prepare a will

Knowing your wealth and where it is kept

It might sound obvious, but knowing how much money you have, whether it is liquid or not and where it is stored, is really important. 

Once you have a good understanding of what your overall financial wealth is, it will become a lot easier to sort and protect it in the future. 

Besides from the money you have in your bank account you also need to consider your non-liquid assets. This can include a range of things such as property, stock investments and bonds. 

All of your investments count as overall financial wealth and will also need protecting as they are considered your assets. 

 When and why you should increase your liability insurance

Liability insurance is an important element for protecting your wealth. 

In short, liability insurance will provide you protection against any claims which result from injuries and damage to people or property. 

So, when should you start thinking about getting liability insurance? 

As soon as you are responsible for yourself and living on your own. Even if you think your wealth isn’t worth protecting just yet, maybe you think you aren’t earning enough or your portfolio isn’t diverse yet, you should still consider getting a form of liability insurance. 

Even if you think you have nothing to lose right now, it could impact your future assets and put them at risk if you are ever held liable for property damage or personal injury. 

Put your part of your money into long term bonds

In finance, the most common types of bonds include municipal bonds and corporate bonds.

In short, if you buy a bond from a company, that money will go towards managing their debt or funding a project they might be working on. The overall agreement is that as time passes, they earn their money back from whatever they are exploring and pay your investment back with interest. 

How does this protect your wealth?

It's less risky than investing in the stock market. When the stock market eventually drops or crashes, the value of bonds will usually go up. 

This is because when the stock market begins to plummet, people panic and pull out their money. After this occurs, people will then tend to turn to the ‘safer’ investment which is bonds. 

Investing in bonds will help you grow your wealth whilst simultaneously protecting it. 

Separate your finances

This may sound a little extreme, but by keeping your money separate from your partner, it could mean that you are able to protect your wealth better. 

For example, if you put your funds into a joint account with your husband or wife, it could instantly become half theirs. This might not be an instant problem. Yet it could pose an issue in the future when it comes to inheritance. 

If you decide to put your money together and for example, you have children from a previous relationship or marriage, this could mean that those children get less than expected when you pass away. This is because you have halved your wealth with your partner. 

Again, this problem can worsen if you are contemplating a divorce. To keep your money and investments fully protected, you should consider separating the majority of your finances. 

Prepare a will

Thinking about passing away can be considered a morbid subject, however, you need to think about the future of your wealth when you are no longer around to preserve it. 

By preparing a will, it will allow you to gather and see all of your active investments. You will be able to see where all of your money is and how much you have all together. 

When drafting your last will and testament, it will permit you to see all of your non-liquid and liquid assets, as you will have to put them all together and down on paper. 

It will also mean that you can protect your wealth after you have departed and ensure it goes to the correct people or places. You can distribute any of the assets you own and legally specify a number of other provisions. 

If you are looking to learn more or get some advice surrounding the protection of  your wealth, you can reach out to us now. Our team of experts are available to answer any questions or queries you may have about persevering your profit. 

Contact us today.