Wealth Preservation Strategies. Part 1

Preserving and Managing Wealth in a Chaotic World
By Joe Krier

Preserving your wealth should be the primary concern whether you’re a millionaire or a whether you’re a “thousandaire.”

The point is to make sure you’re earning something on your money.

Take all your money in the form of small bills, put it in a coffee can and bury it in the back yard. Be sure to bury it deep enough so Fido or a prying neighbour doesn’t find it …

Many investors are feeling this way as the markets continue their unpredictable swings and the federal government alters the landscape in an effort to deal with economic instability. Fear not, there is a better way. Preserving your wealth should be the primary concern whether you’re a millionaire or a whether you’re a “thousandaire.” Whether you’re 40 or whether you’re 80.

Believe it or not, Ripley, a variation of the Fido strategy isn’t a bad place to start. However, not with small bills and coffee cans, but banks and money market accounts. If you’re absolutely averse to risk, there’s no point in owning anything other than CDs and money market accounts. The point is to make sure you’re earning something on your money. After all, you worked for it. Make certain it works for you. Too many banks are making a fortune from people sitting on large balances in low or no interest savings accounts. They use your money to lend to your neighbour at four, five, or six percent or higher and simply keep the difference. It’s well worth the effort to visit to the local branch to get an extra couple percentage points. These days, most CDs and money market accounts are just as safe as the savings account.

If your risk tolerance is slightly higher, you can venture into the short-term bond market. With short-term bonds/treasuries issued by the federal government, your only real concern is if the federal government will still be in business when the bonds mature. The same is true with corporate bonds. If you buy a corporate bond issued by a blue chip company, perhaps one you are familiar with and have observed their stability and growth, you can often earn substantially more than CDs and money market rates without putting yourself out on a limb.

Taking this a step further, if you are ultra-conservative, yet you believe in the growth potential of the stock market, take a portion of your wealth and invest it, however, keep the following in mind:

Don’t Bet the Farm

  • Keep the percentage to less than half of your investable assets.
  • Look for more senior, hence probably wiser money managers and investment advisers. I prefer older men and women that have some skin in the game—money managers that have an ownership interest in their company.  Managers that are compensated based on performance-relative-to-market indices are not usually a good fit because it often forces them to be more aggressive than necessary.

A key strategy for the “growth” portion of your portfolio is a “sell strategy.”  This is a process of determining your maximum allowable loss from a given investment and giving hard sell instructions. The key to predetermining the selling point is that, when the time comes, there is no second guessing, the final sale is made.  For some people this is a loss of five percent. For others who can take the hit, 25 per cent. Regardless, having a sell strategy in place beforehand removes getting emotional about the transaction, ultimately preserving your wealth.

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  367. Hey just wanted to give you a quick heads up and let you know a few of the pictures aren’t loading properly. I’m not sure why but I think its a linking issue. I’ve tried it in two different browsers and both show the same outcome.

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  369. Does your website have a contact page? I’m having problems locating it but, I’d like to send you an e-mail. I’ve got some ideas for your blog you might be interested in hearing. Either way, great site and I look forward to seeing it expand over time.

  370. Very good written information. It will be helpful to anyone who employess it, as well as me. Keep up the good work – can’r wait to read more posts.

  371. I don’t know if it’s just me or if perhaps everyone else encountering issues with your site. It looks like some of the text within your content are running off the screen. Can somebody else please provide feedback and let me know if this is happening to them too? This may be a issue with my browser because I’ve had this happen before. Kudos

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