(Most of my writing here on the Amateur Financier focuses on building up your wealth; given my position in life’s journey (as well as my general LACK of wealth), this makes sense. But there’s no sense in building up your wealth if you don’t have a plan in place to keep what you’ve grown. Hence, this post from Kristy Ramirez, which can hopefully help you get a better idea on how to keep your wealth when it’s been gained. Good luck on all parts of your personal finance journey!)
More than 90 percent of Americans retire without having put away sufficient funds to allow them to enjoy a comfortable lifestyle and take part in all of the activities they had been looking forward to in their golden years. If this is a figure that you don’t want to be a part of when you retire, you must take certain steps now to preserve your wealth throughout your life, so that when your retirement arrives and you don’t have to worry about going to work anymore, you will have preserved enough of your wealth to continue living the good life.
In order to be able to preserve your wealth you must first create a situation where you are able to build wealth and this comes down to you having a plan. In order to set out a successful plan use the following seven easy steps:
1. Direct your plan towards your retirement. Make your retirement your main priority, as this will be the time of your life when you will no longer have to worry about earning a living, but you still want to be able to enjoy living on the same, or a very similar amount of money to your previous income.
2. Always keep a balance between your savings and investment strategies. This means taking into account your goals, time frame, and amount of risk you can afford to carry.
3. Always be realistic. Try and avoid falling into the trap of looking at the world through ‘rose coloured glasses’ the more critical you are regarding an investment opportunity for example, the better prepared you will be to see its dangers as well as its advantages.
4. Never be hesitant in seeking advice from a qualified financial adviser. Expert opinion from outside of your situation and without any bias or invested emotions will often have you seeing the deal from a different viewpoint completely.
5. Avoid having only one long term goal. It is much safer to have a series of goals, all heading in the same direction, but with a definite time frame and different approach for each.
6. Redefine your goals as well as your financial needs on a regular basis. Situations and circumstances in life continually change and you must remain flexible enough to accommodate any such change and readjust your priorities to suit.
7. Throughout all this never lose sight of your own risk tolerance. Fully understand and know your financial limitations and what level of loss you could withstand without it becoming terminal.
While you are working on building your wealth through property investment, shares, or your business activity, you must also have one big over riding plan in place to make certain your plans are fully protected, and that plan is life insurance.
Preserving the financial security of your family is an important legacy to leave behind, especially since your family have been involved in building that wealth with you, and will want to continue to enjoy it in your honour after you are gone.
A life insurance policy can also give you the benefit of disability and accident protection should you unfortunately become subjected to a serious illness or accident that prevents you from carrying out your normal occupation. Savings plans, managed funds, direct shares, property and superannuation are all ways to achieve wealth but as your assets grow your replacement risk becomes that much more important to you if something were to occur where you could no longer earn a wage. This is why your financial plan will not be complete without wealth protection through life insurance.
The secret to your eventual success will be in your ability to invest regularly as this is the most effective and convenient way of reaching your goals. Even a small investment made now can grow significantly with the help of compound interest. Put your savings into a regular investment plan and keep investing each month. Such a plan over the long term will smooth out the costs associated with buying investments on the market at a later date, when you need to manage the risks of exposing yourself to the market’s variations.
It is therefore imperative that you take the necessary steps to protect your wealth, your family and yourself, both now and into the future, whatever it may hold.
Kristy Ramirez writes for Life Insurance Finder where she helps people to compare and select the best life insurance policy to meet their needs at the best possible price.
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