5 Risk Management Strategies for Protecting (and Growing) your Wealth
While risk is everywhere, our goal at Client First Capital is to optimize risk planning in a way that clients can maximize returns with the lowest risk. We specifically focus on helping our clients take the steps necessary to protect themselves financially and manage that risk through our comprehensive Risk Management Strategies. Each individual tolerates risk differently, which is why we tailor our client’s portfolio to meet their personal needs and goals. With wealth and risk planning in mind, this article will dive into ways you can be on the offensive side of managing risk and offer tips on how to protect and grow your wealth in the years to come.
Plan for Income Replacement
As a rule of thumb, individuals should plan for an income replacement rate of 75% of their gross pre-retirement income to maintain their current lifestyle in retirement. This percentage might be higher or lower depending on your future goals and your situation. Your financial advisor can help you plan for the future and make sure that you are set to successfully meet your financial goals for retirement and beyond.
Plan for Liquidity
Liquidity refers to the ease of turning an asset to cash and how quickly you can access that cash. At Client First Capital, our goal is to make sure you always have accessible liquidity no matter the state of the market.
Limit your Legal Liabilities
Consider umbrella coverage in addition to your home and auto insurance policies. Umbrella insurance is extra personal liability insurance. It comes into play when you have a claim in excess of the standard liability limits on your auto, boat and home policies. It also provides coverage for claims often excluded in other liability policies.
Diversify
Portfolio diversification is an important part of risk planning and involves the allocation of money across many asset classes and sectors will help avoid disaster in a downturn. Investors often believe that their portfolio is diversified if they own a few different mutual funds. However, if those funds are all invested in similar if not the same stocks, they are not as diversified as they could be. Consider thinking beyond stocks and bonds: ETFs, cryptocurrency, commodities, and REITs are a few other ways to diversify your investments and contribute to wealth planning.
Remember to Assess your Risks
Effective risk planning strategies will evaluate liabilities on an ongoing basis as things can change from your last assessment. Continue to update your financial goals and plans, especially when life events occur.
How Can We Help?
For more information on risk management, or to discuss your wealth planning strategies, please feel free to connect with us by sending an email or filling out our contact form.
