5 Risk Management Strategies for Protecting (and Growing) your Wealth

While risk is everywhere, every day at Client First Capital, our goal is to take the lowest amount of risk while maximizing your returns. We specifically focus on helping our clients take the steps necessary to protect themselves and manage that risk through our Risk Management Strategies. Everyone’s tolerance for risk is different, and we tailor every client’s portfolio to meet their tolerance. This article dives into five ways you can be on the offensive side of managing risk and protecting and growing your wealth in the years to come.

1. Plan for Income Replacement

As a rule of thumb, individuals should plan for an income replacement rate of 75% of their gross pre-retirement income to maintain their current lifestyle in retirement. This percentage might be higher or lower depending on your future goals and your situation. Your financial advisor can help you plan for the future and make sure that you are setup for success to hit your financial goals for retirement and beyond.

2. Plan for Liquidity

Liquidity refers to the ease of turning an asset to cash and how quickly you can access that cash. At Client First Capital, our goal is to always make sure you have accessible liquidity no matter what the market is doing.

3. Limit your Legal Liabilities

Consider umbrella coverage in addition to your home and auto insurance policies. Umbrella insurance is extra personal liability insurance. It comes into play when you have a claim in excess of the standard liability limits on your auto, boat and home policies. It also provides coverage for claims often excluded in other liability policies.

4. Diversification

Portfolio diversification which is the allocation of money across many asset classes and sectors could help with avoiding disaster in a downturn. Investors sometimes think they are diversified because they own a few different mutual funds, but if those funds are all invested in similar or the same stocks, they aren’t as diversified as they think. To further diversify, consider thinking beyond stocks and bonds, ETFs, cryptocurrency, commodities, and REITs are a few other ways to diversify your investments.

5. Don’t forget to reassess your risks

An effective risk management plan will evaluate liabilities on an ongoing basis as things can change from your last assessment. Continue to update your financial goals and plans, especially when life events occur.

Related: Protecting What is Financially Yours