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6 Ways To Avoid Losing Your Hard-Earned Financial Assets

Starting your own business and investing in stocks are both legitimate and effective ways to make money. However, all your hard work at either of these two endeavors may wind up ending poorly if you mismanage the assets you gain. Legal action could come against you, for example, or you could lose the assets you’ve gained in other ways if you’re not careful with your money. 

Most people usually look to the big, leading banks to protect their hard earned money. There is nothing wrong with taking that path and parking cash in savings accounts or CDs. However, there are other things to do to protect your assets. Here are a few things to look at. 

Consider Forming An Offshore LLC

LLCs or Limited Liability Companies are legal entities that allow business owners to separate and protect business liabilities from their assets. It is considered the best way to protect your company from any obligations, reduce tax liabilities, and build flexibility when managing and maintaining your business. 

Forming an LLC will prevent the hassles of double income taxation. Contrary to what most corporations have to go through, the profits in an LLC are only taxed once on each member’s federal income tax return. Moreover, unlike large corporations, an LLC doesn’t require bulky paperwork and other administrative procedures that come with registration. All you have to do is file articles of organization and pay the necessary fees. 

What’s a real life situation where someone would create an LLC ? One common example would be real estate. If you owned property that you were renting out, forming an LLC should be a must. This separates your activities as an owner and landlord from your personal financial life. If a tenant sues you, they would actually be suing the LLC, not you. The LLC creates a barrier that makes it very difficult for them to come after your personal assets.

Related Content: 6 Ways to Survive the Dark Side of Rental Real Estate

It would be advisable to seek the assistance of legal counsel to enlighten you about the substantial and procedural aspects involved in forming an LLC, other important laws, ordinances, and legal entities. A  lawyer can discuss any important LLC benefits  and the necessary steps in forming one. 

Create A Will To Protect Your Assets

Do you ever wonder what will happen to your financial assets in the event of your death? People should consider securing their financial assets to people they have approved of before time runs out. It may not seem like the most pressing issue at first, but this is an important consideration. If you don’t decide who will have your stuff, then a court will. And why would you leave it up to the court system to determine where your assets go? 

Creating a will is one of the best ways to protect your assets from mismanagement or misuse. You can use a will to distribute how your assets should go after you die. For example, you might want to leave some of it to charity organizations or to certain people. The important thing is to plan for possible situations to ensure that your financial assets are in the right hands even when you’re no longer alive. 

Related Content: How to Make a Will and Protect Those You Love

Ensure You Have A Sufficient Healthcare Insurance

One thing that no one wants to happen is to get sick without healthcare insurance. When you’re healthy, it’s easy to forget how important this is until the need arises. Health insurance is a great way to protect your assets because you’re guaranteeing your medical bills prior to what may come. 

Without it, expensive medical bills can lead to bankruptcy. Take cancer treatments for example. These cost hundreds of thousands of dollars over the life of your care. Without health insurance, you might end up spending all the nest egg of cash and investments you have saved up.

Related Content: A Beginner’s Guide to Health Insurance

Keep An Emergency Fund

Unfortunate circumstances may happen whether or not you can afford to pay for expenses. However, most people don’t think they need an emergency fund until something terrible happens. Cars break down, roofs leak, people are jobless, and the list of emergencies that will happen goes on. That’s why it’s important to save for these events. 

Having an emergency fund ensures that you don’t go broke when unfortunate events occur. It allows you to protect your financial assets by assuring that unexpected expenses can be dealt with. And it helps you not go into debt to finance any emergency. All you do is retrieve the money from your savings account to pay for the incident. 

Related Content: Emergency Fund Basics: The Beginning Step on Which All Other Success is Built 

Diversify Your Financial Assets

Having too much money in one asset is risky, especially if it fails. For example, suppose you have allocated all your investments in real estate. If the real estate market crashes, you might lose everything. That’s why it’s best to diversify your financial assets into various types of investments.

You can diversify your financial assets into cash, CDs, stocks, bonds, real estate or other investments to ensure that you still have wealth if at least one of those things fail. 

Keep Your Finances Private

The internet has made it easier for people to look into others’ information. Social media profiles make it easier for people to learn about your life. People can look into your financial information if they know where to look for it.

Most people don’t realize that posting their day-to-day lives might create a pattern that cybercriminals can use to steal their information. Be aware of what you share online, especially financial-related information. Keep your financial life close-to-the-vest, and don’t give criminals a chance to steal your information

If you don’t, you may become a victim of fraud or identity theft. Saving your financial assets is difficult enough, but thinking about losing them to fraudsters makes it even worse. 

Related Content: How to Protect Your Child From Identity Theft

So be careful about company profiles online that are designed to attract investors. People may be trying to take advantage of you and steal your money.

Look for phishing and smishing techniques online. Phishing is when people try to steal your personal information using emails and websites. Smishing is the same type of idea but done through texting. They will usually pose as your bank or a company with which you have an account, stating that there’s an issue with your account and it needs to be fixed immediately to avoid suspension.

If you’re wary about it, never give your personal information through email or text. You can ask about the issue directly from the company website or directly at your bank. 

Final Thoughts

No matter how big your financial assets are, there are just so many factors that can take them away. However, there are also several ways to ensure that you can keep and protect what you’ve earned. The factors that may cause you to lose financial assets are all avoidable. You just need to take the right precautions anytime you make a decision involving them.

Leave a Comment or Answer a Question Below: What are some other ways to protect your assets? Do you have an LLC? If so, were there any challenges with forming it?  Have you ever been taken advantage of and lost money through a scheme or scam?

Photo by Melinda Gimpel on Unsplash

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