Eight Financial Risks to Avoid

risk

The rich rules over the poor, and the borrower is the slave of the lender.” Proverbs 22:7

We need to know that our money is always at risk when we place it in the market and other investment means where there is the potential and even certainty of loss.

What is financial risk?

It usually means that a person or business will not be able to meet their fiscal obligations, such as to manage and pay back debts. There are also credit, liquidity, asset, and investment risks.

Here are the top ways you can lose your money:

Market Risk.

drawdown stocks

Many are exposed to this risk on a daily basis with mutual funds 401k’s and so forth. Especially since most 401K plans uses D grade funds! For a recent example, in March of 2020, most people lost 30% to over 80% of their retirement money. As this also happened in 1987 and 2008 and several more times in 2020. Did you know this happened more often that you may think, such as in Oct. 13, 1989, 1991 recession, Sep. 16, 1992, Jul. 2, 1997, Oct. 27, 1997, Mar. 10, 2000, Sep, 11, 2001, Oct, 9, 2002, Feb. 27, 2007, Sep. 16, 2008, May. 6, 2010, Aug. 1, 2011, Aug. 18, 2015, Sep. 20, 2018 and so forth. And, this will happen again. This is basically gambling with your future money. And no, your money does not come back. You gain from your loss; you do not get back what you lost. If you never lost, then you will gain ever so more. There are better ways to invest without having a loss.

Tax Risk.Screen Shot 2020-07-03 at 1.43.12 PM

Taxes will go up. Today, taxes are low; yet with the out of control overspending of our government, this will come home to roost. Like it did after WWII and the late 1970s. Thus, taxes will go up in the next 4 to 5 years because the current tax cuts in place will all expire, and our government is in great debt. Thus, with most IRA and 401k plans you will pay the tax when you take the money out, so you will end up paying more. There are plans where you do not have to fear this.

Inflation Risk.

inflation risks

Money today is worth far less than the same amount 10 to 20 to 50 years ago. This wastes away into the current and especially the future value and further growth of your money. Instead of your money growing, the growth rate of return rarely exceeds the inflation rate. You can have a plan to circumvent this.

Long Term Care Risk.

health-care-spending

Most people are living longer while healthcare costs are ever so increasing. Thus, our retirement may come with unexpected and unaffordable costs as we outlive our money. So, expect your health insurance will no longer cover your needs when you need very expensive care. There are better ways, such as living benefit plans you can have to prevent this.

Longevity Risk.

outliving-your-money

After you have planned well for retirement, will you have enough? Most people will not have enough money to live on. Do you have a good plan?

There are more risks to consider: 

Withdraw Risk. When you take out your money, there will be penalties and taxes. So, you need to have better solutions than an employer funded, or government IRA can do for you.

Sequence of Return Risk. If you take out your money from an IRA, when the market is down, so will be your money. You may never recover that loss. Why? Because after the loss, your money grows from the point of loss, not the growth point.

Order of Withdraw Risk. You must be diversified, so you are balanced; you do not want all of your money in the same basket.

Either money controls you or you control your money!

There are fantastic high growth financial plans that do not involve risk. That will make a compounded 8-15%+, as they have over the last several decades. Even in 87, 08 and recently in 2020, and even going back 100 years. Yet, most Financial Advisers will not tell you about them because they sell to you what makes their company the most money. They do not care about your future, only their profits. If they cared for you, your 401k would be in A grade investment and you would not have had the biggest losses over its life. As, Wall Street and the Banks make money from your losses!

We are different, we put our clients before the commission and only seek what is best for them.

Our mission is to help and educate, preserve, and build financial stability for our clients.

For help with insurance, debt management, and rolling over 401k’s to a secure retirement fund with tax advantages, that will not lose your money, give us a shout, we will help you. seminarsonmoney@gmail.com

 

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