Most investors concentrate on one thing; their returns. It makes sense of course but the fact is that it’s easy to get obsessed with ROI and percentage points. Unless you’ve adequately protected your assets however, you may unfortunately still be in for a huge loss if something out of the ordinary occurs. Simply put, one major car wreck, accident or even taking your Social Security benefits too early can do more damage financially than even an annual return of 20% can repair.
And that’s why we put together today’s blog with some excellent tips for protecting your money, and your financial future, in 2014, something that most people should be much more concerned about than any percentage point. Enjoy.
The biggest layer of protection that you have against events that can bring financial ruin is your insurance. From life insurance to disability, car, homeowners, liability, medical and long-term care, your insurance policies take the majority of the risk that you face every day and shift it to an insurance company. While the details of all of these plans can sometimes be quite complicated, including the deductibles and tax consequences, there is simply no better way to protect yourself financially than to make sure that all of your insurance policies are current and correct for your lifestyle.
After insurance one of the most vitally important things that you should have is an estate plan so that, in the case of your unexpected demise, your family pays as little taxes as possible. This should include things like what to do in case of long-term disabilities as well as specific orders for medical directives. If you want to add an amount of order to your financial affairs as well as simplify estate settlements, guide your family and adequately plan for taxes there is nothing better. The biggest difference between trusts and wills is that with a trust your assets will pass instantly to your heirs and the details will never become public record.
Starting a Business.
If you’re going to be opening a new business this year one of the main directives that you have will be to choose whether you will have a sole proprietorship, a partnership, a corporation or a limited liability company or LLC. The fact is that the type of business that you choose will have an immediate and lasting effect on your financial situation. Businesses that have a limited amount of risk like personal injury or large amounts of money should probably consider being opened as a corporation or LLC as this provides protection against personal liability. On the other hand a sole proprietorship is probably your best bet if your business is low risk and you’re looking to start it with the smallest amount of fees possible. Since most taxes are based directly on profits there is only a small amount of difference between a partnership, LLC or so proprietorship. Taxes on a corporation are different however, especially for the first $50-$75,000 of income that your business makes.
Of course none of these strategies is a guarantee of either personal or business success or complete protection against losses and thus all of them should be thoroughly discussed with your family members as well as your personal financial advisor. When it comes to estate planning you’ll definitely want to talk to an attorney and with insurance you are insurance agent is more than likely the best person to have a long conversation with before you make any final decisions.
Once you’ve done all of these things and fully protected yourself and your assets, then it’s time to start looking at investment returns and ROI. Of course if you have any questions about personal finances in 2014 all you need to do is write us an email, drop us a note or send up a smoke signal and we’ll get back to you ASAP with answers and advice.