Protecting your wealth has never been more crucial. As the global economy slips into a brutal recession and inflation ravages major currencies like the US dollar and British Pound Sterling, keeping hold of your money is of paramount importance.
It is also vital to note at this point that wealth does not always equate to hundreds of millions of dollars. Wealth is the cash and other assets you have accumulated over your lifetime, which need constant management to prevent them from slipping away.
There is a common misconception that once you have earned a certain amount of money, you can leave it in a bank account and forget about it. While there is nothing inherently wrong or implausible about this, it might not be the wisest option if you want to maintain or even grow your wealth over time.
Instead, by developing a basic understanding of money and financial assets, you will put yourself in a far stronger position when it comes to knowing where to store your wealth.
Here are three easy steps to protecting your wealth:
Develop an understanding of financial assets
The most critical step you need to take is understanding basic financial terms – such as inflation, compound interest, assets, liabilities, and the various asset classes at your disposal.
We live in an age of incredible possibilities regarding financial asset classes. Only thirty years ago, it was virtually impossible for anyone but the uber-rich to trade or hold equities, open an investment account or own gold – let alone the variety of newer assets that have sprung up since.
For instance, the crypto asset class has taken the world by storm and is now considered by an increasing number of investment firms as a respectable, mainstream asset class.
Crypto – such as the ‘blue-chip’ project Ethereum, is freely available to buy on exchanges like okx.com, which makes it easy to get started.
However, before you go investing your money in assets, you need to do your due diligence and have a strong understanding of the class.
Locate the best asset for your requirements
Once you thoroughly understand how wealth is built and maintained, as well as the various asset classes available, it is time to locate the right asset class for you. No one – not even a financial advisor – can tell you which one is best, for they all have different benefits and drawbacks. What’s more, the strength of each market ebbs and flows.
In bull markets, commentators proclaim the asset as an incredible investment, whereas when it slips back into a bear market, suddenly, it is doomed to fail. Markets perform in much the same way as living organisms. They have ups and downs, so you need to make your decision based on first principles rather than fleeting performance.
Have firm conviction in your actions
This brings us to the final step – having firm convictions. As the recent bear market in many markets has become ever more brutal as a recession sets in, it is easy to sell up and get stung at a lower price if you are not totally committed to your position.
It tends to be people and businesses who jumped on the bandwagon when the price was going up and wanted to make a quick buck who suffer most when times are hard. Instead, if you thoroughly research and form a reasoned argument for investing a certain way, you are more likely to ride out the hard times and be proven right.