Safeguarding Your Wealth: Protect Your Passive Income And Other Investments
All investors should take appropriate steps to ensure their wealth is protected. Your portfolio serves as your lifeline once you retire, so it is crucial you do all you can to ensure that it is protected from any potential pitfalls. Whether you are earning passive income or utilizing more traditional investment methods, be certain that your biggest assets are protected.
Many times, investors will go in together on a variety of investment opportunities. This is not at all uncommon in the world of film investment. Many investors will partner together to fund certain projects. The problem arises when those partnerships are not formalized. If you decide to work with a friend to see a project through, your portion of the investment could be at risk should that friend get sued in any fashion. Avoid this by creating a formal partnership that protects your interests.
Shield Assets Though Incorporation
To create a formalized partnership with one or more people, you will need to form a corporation or other business entity to shield your assets. This should also be done even if you are not partnered with anyone, as it can protect you should something catastrophic happen. Unincorporated assets are at risk for garnishment from a personal lawsuit against you, should you find yourself in that situation. By placing your interests into a LLC or corporation, your wealth will be its own entity and cannot be collected as a form of legal payment.
Diversify Your Portfolio
All investors must be certain that their portfolio is diversified. Placing all of your eggs in one basket is asking for disaster. Keep a mix of traditional retirement accounts, mutual funds, stocks, and other funds so that they can all act as backup in the event something happens to the market that causes your assets to shrink. Earning passive income through angel investing is another great way to mix up your investments. This is an ideal option for investors who wish to grow their wealth.
Protect Joint Accounts
If you hold a number of accounts with someone else, whether it is spouse, child, or business partner, it is important to review those on a regular basis to ensure everything is on the up-and-up. Any money deposited can be at risk should one of the account owners find themselves in a legal or financial mess, including tax liens, lawsuit judgments, or a partner filing for divorce. Try to avoid investing too much money with someone else in order to safeguard your wealth.
Purchase Liability Insurance
If you are not currently carrying liability insurance, do so immediately. If you are carrying liability insurance, make sure you have a limit that is proportionate to your net-worth. This is especially important for those who suddenly have a windfall of money earned from passive. Liability insurance acts as your safety net from litigation. Take a few moments to call your insurance broker or financial consultant, like Alpha Squared, to either increase your coverage or to open a policy.
Protecting your wealth is one of the most important things you can do for yourself, your business partners, and your family. By taking these simple steps, you and other investors can protect your assets, from traditional to those earned through passive income.