Wealth Protection: Avoiding Losses

You can’t create wealth until you preserve it first. Each dollar lost unnecessarily isn’t just a single dollar lost, but a compounded dollar lost. A dollar not lost allows wealth to compound from a higher floor. Losses can occur from many places beyond investments: property, income, taxes and fees. It is well worth paying for the expertise of professional advisors who are able to prevent or reduce losses in all of these areas.

The Key Takeaways
o Protecting your wealth from losses allows you to build more wealth, as compounding growth is able to build on a larger base.
o Losses can occur from many sources you may not have considered.
o Experts can help you identify where these risks are hiding and provide solutions to protect you.

Prevent/Reduce Losses to Grow Wealth
Any time you can prevent or reduce a loss, you preserve wealth. Here are five areas in which losses may occur.
1. Investments: Choose your investment manager carefully. Ask how losses can be avoided. Look at past performance history of each investment, but be aware that one with the highest returns may also have the highest losses and a volatile historical record. Take the time to review your asset allocations, investment manager’s performance, and level of risk, and make changes when necessary.
2. Property: If you have a loss on property that is not insured for its full replacement value, you will pay for the uninsured part of that loss out of your own wealth. Periodically review the full replacement values of your property and maintain adequate insurance.
3. Income: You may lose income due to a layoff, illness or injury. Having adequate health insurance, disability income insurance and an emergency fund that will cover at least six months of lost income will help to preserve the rest of your wealth until you recover or find other income.
4. Taxes: Most people think about income taxes when considering tax management. However, other taxes are also important to manage, like capital gains taxes or matching gains and losses when selling investments or property. An experienced estate planner can help you with estate tax planning and income tax planning for wealth transfers during your lifetime and after death, including the sale or transfer of a business.
5. Fees: Many fees, such as investment product fees, trading expenses, and insurance product surrender charges, can be avoided or lessened with a comprehensive financial plan.

What You Need to Know
An experienced estate planning attorney can also help you shield your family and your assets from probate court interference at incapacity and death, unintended heirs, unnecessary legal fees and taxes, and lawsuits.

Additional Actions to Consider
o If you need an advisor who specializes in a certain area, ask for referrals from other advisors, your banker, friends and business acquaintances. If you start hearing the same name several times, you’re probably on the right track.
o Take the time to research and understand any strategies that are being recommended to you. An educated consumer is a smart consumer.

Office Location: 2655 First Street, Suite 250 | Simi Valley, CA 93065 | Phone: (805) 915-4760 | Fax: (866) 316-1170
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