Best Ways To Preserve Your Wealth
What would you do if you lost all the wealth you’ve built so far? Today we’re here to discuss how to preserve your hard earned wealth.
Manage Your Money Well
This one is so obvious. Think about it, how can you preserve your wealth if your money management skills are non-existent. Being great at managing your cash does more than just allow you to build wealth.
It enables you to keep it. Making money is only half the battle and keeping it is the other half. So here’s the thing, excellent budgeting is easily the most effective way to manage your money.
Budgeting may feel restrictive because after all why would you give up the freedom to spend as you please. But don’t fall for that line of thought.
With proper budgeting, you stay ahead of your finances and this goes a long way in helping you to hold on to the wealth that you accumulate over time.
Boost Your Income
I know you’re wondering what does increasing my income have to do with preserving it? Well, an increased income means you won’t be eating into your net worth by tapping into your savings, going into debt or disposing of some assets.
And besides, an increased income means extra cash. You could save and
invest to realize even greater returns.
How can you boost your income? You could negotiate a salary increase at work, make money from your talent, turn your hobby into an income generating activity, or start some other kind of passive income activity.
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Investing wisely is also a great way to preserve your wealth. When you invest money wisely, you grow your wealth. If you start it at point b smart investments will take you to point c.
And as such you won’t remain stagnant at point b or even worse go back to point a. This is some pretty basic stuff.
Are you familiar with the story of Patricia Cluj? If not, research it. What’s the moral of the story? You need to invest in different things instead of investing everything into one opportunity.
Spreads your investments over several assets like the stock market or
real estate. Don’t put all of your eggs in one basket.
Hire a Good CPA
Another great way to preserve wealth is by being ahead of the good old tax man. What better way to do that than by having a good accountant and tax advisor.
In case you don’t know, a CPA is always up to speed with developments and tax regulations.
He/she will advise you on legal ways to reduce your tax burden and consequently you get to avoid tax issues. Meaning you won’t have to pay fines that could eat up your net worth.
You might not have given it much thought but insuring your assets is actually an excellent way to preserve your wealth. This is especially useful as climate change intensifies.
Your home or investment properties are now at an increased greater risk of catastrophes such as hurricanes, tornadoes, wildfires, hail storms, or flooding.
If you are insured, it will sting but you’ll be better taken care of if you aren’t. You could be left with a lot of damage but not many options
Seek Good Legal Advice
Rich people are in court every day. That thing about being lonely at the top is indeed often true. But what they probably didn’t tell you as much was that there’s a lot of litigation at the top.
Like it or not once you make it, you become a target for your neighbor, past colleagues, random strangers, your security detail the list goes on and on.
The motivation well, it’s mostly a slice or even the whole of your wealth and that’s why you need to have a lawyer. Engage the best legal minds by your side they will help you to battle predators and also guide you through business contracts.
They will also tell you when to stay silent before your mouth costs you half of your wealth.
Have an Estate Plan
You want a reason to create an estate plan. Estate planning will offer asset protection. Develop a plan for continuing your legacy after you’re gone.
Offer tax benefits, support your favorite cause, and ensure your family avoids probate court.
Pick Executors and Trustees Wisely
Another way to preserve your wealth also boils down to the person you choose to be an executor or trustee for your estate. Sure you might want to go with a family member because you feel like you know them.
But even so this decision can turn out to be a problem as family members have their own prejudices that could undermine your judgment. So to ensure transparency, it’s best to pick a professional like a lawyer as an executor or to find a trust company to manage your trust.
Sign a Prenup
That’s right. Signing a prenup is another way to preserve your wealth. Not to be grim about anything but while a relationship might start with all butterflies and rainbows, it could end up in the mud with some name-calling, and going for each other’s throats or at least property.
However, if you had a prenup, you would have one last thing to worry about during such trying times. At least your property and investments will be preserved.
Prepare a Will
Look nobody likes thinking about death but it’s inevitable and writing a will is a must. Aside from allowing you to distribute your assets upon your death as per your wishes, a will enables you to specify your debts.
And let me just give you a tip. If you want your assets to be passed down to your family, you need to keep updating your will. This way, you can preserve your wealth and pass it down on your own terms.
Keep Tabs on Your Assets
The last thing you want is your assets to slip away from you just because you don’t have up-to-date documents or know how they’re doing. and no, this is not about doing the extraordinary.
You could start with simple things such as putting copies of important documents in a safe place. These could be insurance papers, withdrawal receipts, bank account papers, retirement contributions, real estate purchase papers, power of attorneys, and so on.
Having these papers sorted and safely stored gives you a good hold on your wealth.
Have an Emergency Fund
To preserve your wealth, you need to build an emergency fund to cover three to six months of your family’s expenses in case you lose your job or are unable to work.
You should be creating one that could cover you for even longer than that but by setting up an emergency fund. You will not undermine your net worth by selling off possessions, taking loans or using your investment money to cover you.
Avoid Naming Your Estate as the Beneficiary for Life Insurance
let me elaborate on this one. The name of the nominee on your life insurance plan plays a vital role in its taxability. If you name an individual as the beneficiary, the insurance money will often not accrue taxes.
However, if you put your estate as the beneficiary, your insurance money will be tallied along with your estate’s gross value and taxed based on the cumulative value of your estate.
Between the two options, which one’s the smarter move? It’s definitely the first option.
How does donating your wealth help you to preserve it? Giving it away is a little counterintuitive right? Well not exactly, and let me tell you why gifting your wealth to family and others allows you to preserve money.
Let’s call it a loophole in U.S IRS regulations. You see the IRS or internal revenue service charges a gift tax on highly valued assets such as a house, and huge amounts of cash.
But even so, there is a limit for this and under that limit you can give gifts without paying any tax. In 2021 the gift tax limit was set at $15,000 annually for individuals and $30,000 annually for a couple.
Any unused asset can be given to a family member or another person as a gift without incurring any taxes. What do you think is the best way to preserve wealth?
Instill Financial Responsibility in Your Children
If you want your wealth to last across multiple generations, you must pass down the financial lessons and knowledge you’ve learned to your children.
What other ways of preserving wealth have you learned from your own experiences?