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Protect Your Wealth Because Your Money Matters

Protect Your Wealth Because Your Money Matters

Jenius Bank Team6/12/2023 • Updated 4/4/2024
Illustrated stack of bills with a shield protecting it.

Don’t risk your hard-earned money; protect your wealth today.

When you hear the term “wealth protection”, your first reaction might be, “That’s not for me. I’m not that rich!” The truth is, if you’re earning money and working toward long-term financial goals, you’re building wealth and it deserves to be protected.

Achieving financial wellness requires looking beyond near-term goals of earning and growing your money. Protecting your wealth takes a long-term view, including planning for the unexpected. Here are some common tips for safeguarding your wealth.

Key Takeaways

  • Protecting wealth is for everyone. Your hard-earned money deserves protection.

  • Looking ahead and planning for the unexpected is vital to protecting your financial security.

  • Steps you take today may help preserve your wealth for years to come.

Yes, You Have Wealth to Protect

First, let’s define what we mean by wealth. Your wealth is the collection of all your financial assets, and may include:

  • Cash in the bank

  • Balances in retirement accounts, such as a 401(k)

  • Your home (if you own it) or other real estate

  • Businesses (in which you’re an owner or partner)

Now that we’ve established that you do have wealth (every bit counts!) — and any wealth is worth protecting — what are some practical ways to protect it?

Diversify Your Investments

In order to effectively manage financial risks, it’s usually a good idea to spread your investments across different asset types, also known as diversification. While every type of financial asset has its risks, diversifying your holdings could help mitigate them.

Diversifying includes allocating your money across many kinds of assets, like real estate, stocks, bonds, cash savings, and retirement accounts. Each class has its own characteristics and when one area loses value, another may be holding steady or gaining, helping to protect your wealth.

Regular monitoring of your investments is crucial to maintaining an effective diversity and growth strategy. It’s important to review your portfolio on a regular basis to see how it’s performing and make adjustments as needed.

These adjustments could include rebalancing your 401(k) investments, which involves selling some assets and purchasing others. Rebalancing helps ensure that your portfolio remains aligned with your risk tolerance and investment goals.

Additionally, it’s wise to keep track of deposit account rates, such as savings and checking accounts and certificates of deposit. Staying informed on these rates may help you make informed decisions about where to keep your cash savings to maximize returns and maintain your purchasing power.

Put the “I” in Insurance

We insure our homes, our cars, even our pets — yet too few of us insure ourselves.

There are various types of insurance, such as life, disability, and illness insurance. However, only about half of Americans have life insurance and around 14% have disability insurance.12

Many people think their health insurance is enough to handle injuries and illnesses, but this isn’t always the case, and even a short-term disabling illness or injury could be financially devastating.

These aren’t our favorite topics to chat about, but they happen to people every day. Insurance is one option to manage these risks. Let’s discuss some basic types of coverage designed to protect your money and you.

Life Insurance

Life insurance pays out a sum in the event of your death. There are different types of policies and the amount of coverage needed varies based on your individual needs. Many people look for life insurance to cover expenses like:2

  • Replacing your income to support your spouse/children

  • Covering funeral expenses

  • Paying off your home mortgage and any other debts

  • Paying for future expenses, such as sending your children to college

Check with your employer to see if you are covered by a life insurance policy through them. Many employers offer this as part of your total compensation package. They may also offer access to competitive pricing for policies through group negotiation.

If purchasing through your employer isn’t an option, there are several life insurance companies out there that could assist you with choosing a policy that fits your situation.

Critical Illness Insurance

If you’re diagnosed with a serious medical condition, critical illness insurance supplements your regular health insurance.

It typically provides a lump sum payment you are able to use to cover qualified expenses, such as mortgage payments, childcare, or out-of-pocket medical expenses not covered by your regular health insurance.3

Disability Insurance

Every year, 5% of working Americans experience a period of short-term disability (6 months or less)5 and 25% of today’s young workers can expect to experience a disability lasting a year or more before they retire.6 If this happens to you, disability insurance may help cover your lost income.

Short-term disability coverage, sometimes called income protect insurance, is designed for employees who will eventually return to work after an illness or injury and usually covers periods lasting a year or less. Coverage may provide 40-70% of a person’s income and last anywhere from a few weeks to a year, depending on the coverage.

Long-term disability coverage may last for years and is intended for people who aren’t able return to any type of work.7

Similar to life insurance, many employers offer disability insurance as part of your total compensation package. Check with your benefits manager to see what options are available to you and if purchasing insurance beyond what your employer provides makes sense for you.

Leave a Legacy

Estate planning, like wealth management, is another term that sounds “rich.” But estate planning may benefit everyone. It protects the intentions you have for your wealth, and it could even keep your wealth growing for the next generation.

Let’s take a look at some common estate planning tools.

Write a Will

A will ensures your assets are distributed according to your wishes, whether that means passing your wealth onto your family or donating it to a cause you care about.

We know that the idea of drafting a will may make people feel uncomfortable, but think of it as a gift to your loved ones. By making your intentions clear, you’re removing the need for those left behind to make difficult decisions and spend money sorting through your estate.

Consider Establishing a Trust

A trust establishes a third party that oversees property or assets for a designated beneficiary. There are many types of trusts, including living trusts and charitable trusts. In addition to ensuring money is allocated the way you wanted, trusts may also help reduce tax burdens.8

Plan Ahead for Taxes

They say only two things in life are certain. And even after death, there may still be taxes.

Estate tax planning helps ensure that more of your wealth goes to the people you designate it to, and not to Uncle Sam.

Take Care of (Your) Business

If you’re a business owner or partner, succession planning helps protect the wealth tied up in your business. Succession planning may involve choosing someone to buy out your share when you’re ready to exit the business or leaving your shares to a family member to take over your ownership.2

If you choose to sell your ownership stake, they may provide an income stream during retirement. Selling also protects the wealth you’ve grown with your business by reducing the chance of shares losing value in the future.

Final Thoughts

At Jenius Bank, we know that everyone has a different opinion of what it means to be “wealthy”.

For some it means buying your dream home or sending your kids to college. For others, it may mean leaving a lasting legacy that gives back to the community.

However you define it, you’ve worked hard to earn your money, and you’ll want to protect it just as fiercely.

Financial WellnessLifestyle