Protect Your Wealth - Find a Consultant to Manage your Portfolio in West Chester PA

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The financial crisis of 2008 has been a nasty reminder how quickly what can take years to build can disappear almost overnight. Dreams of an early retirement or greater financial independence have vanished for many Americans, leaving them wondering what the future holds. With the S&P down over 40% from its October 2007 high, the concept of protecting wealth is at the forefront of many peoples mind.

Most think protecting wealth means purchasing conventional investments like bonds, gold, or certificates of deposit. These tactics have merit and are important tools to preserve wealth in uncertain times; however, in my opinion wealth protection is more than that. The economy will continue to experience boom and bust cycles, and asset values will rise and fall as a consequence. To help protect yourself, you should adapt a view that goes beyond the fluctuations in the stock market. Life is plagued with wealth destroying landmines, and if you are not careful you too can become a victim. Here is a quick list of common wealth destroyers you should consider:

Wealth Destroyers:

Divorce

Injury or Health Problems

Inadequate Insurance Coverage

Lack of tax & estate planning

Job Loss

Investment Fees & Expenses

Some of these wealth destroyers are more obvious than others, but it is still important to be cognizant of them. A financial consultant can be an excellent resource to provide you with a rock solid foundation. Financial consultants are invaluable because they have the skill and experience to evaluate each client´s situation from all angles. Retirement, investments, tax planning, insurance analysis, asset titling, and gifting are just some of the issues they address.

Now a 40% correction in the stock market is no walk in the park, but neither is an estate tax bill that wipes out part of your legacy. The point is most people are woefully unprepared for several of the most common wealth destroyers. It would be like malpractice to address just investment strategies without alerting you to some of the most frequent causes that can wipe you out.

In any event, we do not want to minimize the havoc the recent market turmoil has caused. Truth be told, many investors have seen their accounts shrink by 30% to 50%. So what investment strategies do most financial consultants employ to help protect their client´s portfolios? Here is a couple to consider:

1. Diversification among Global Asset Classes

Financial consultants are sensitive to the global nature of today´s new investment reality. They look to gain exposure to multiple arenas around the world. Portfolio management has been expanded from traditional asset classes like stocks and bonds to include commodities, currencies, and emerging markets. As world markets become more integrated, many advisors are looking to exploit opportunities beyond domestic boarders.

2. Rebalance Your Portfolio Regularly

Rebalancing is another key to successful long-term wealth protection. Consider a portfolio with an allocation of 60% equities and 40% bonds. Through the late 90´s and mid 2000´s you would have been moving money from equities to bonds as rising stock prices over weighted your portfolio. As stock prices dropped in 2008, you would be selling bonds at higher prices and moving into equities at lower prices. This strategy epitomizes the old adage of buying low and selling high.

A series of books could be written about wealth protection; however, for our purposes we have come to an end. This article should serve as a primer to get you thinking about protecting your wealth. Perhaps this time has made you ponder your own circumstances and inspired you to start better protecting what is yours.

Disclosure:

There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss in periods of declining values.

Please note that rebalancing investments may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events will be created that may increase your tax liability. Rebalancing a portfolio cannot assure profit or protect against loss in any given market environment.

Securities and Advisory Services Offered through Royal Alliance Associates, Inc. Member FINRA/SIPC.

Advisory services offered through Key Financial, Inc.

A Registered Investment Advisor not affiliated with Royal Alliance.

1560 McDaniel Drive, West Chester, PA 19380

E-mail: pbrennan@keyfinancialinc.com, Phone: 610-429-9050

For more information, please visit www.keyfinancialinc.com.