Rule No. 1: Never lose money.
Rule No. 2: Never forget rule No. 1.
- Warren Buffett
Preserving and transferring wealth is the primary components of a successful wealth management plan. A wealth preservation strategy can ensure that assets not only grow over time but also provide a legacy for one's family. While risk is unavoidable and no-one can predict the changing climate of the market, smart investment strategies focus on investing in a variety of assets that hedge inflation while giving optimal time for growth.
Advance planning can help you understand short and long-term objectives and use tools to help you meet your goals. Consider these three investment strategies for wealth preservation.
Invest in rare coins
Contrary to the hobby of collecting coins, there is now an interest to invest in rare coins, which falls under the category of an "alternative investment," which has grown markedly in the past five years. Before investing in rare coins, it is important to do your due diligence to learn about the investment and verify that you are dealing with a reputable company. Values of the rare coins are determined by the scarcity, popularity, the year and place it was minted, and of course, its "grade" or condition.
Because of extremely low supply, rare coins are not commodities. As such, rare coins experience very low volatility, which means, there aren't wide swings in the market's price unlike the riskiness in investing in certain "young" stocks, which may not yield a high return based on the market price. Wealthy families have been using rare coins for their stability as a wealth preservation vehicle for generations.
Incorporate hedging strategies in your wealth management plan
Although wealth preservation does require some risk, the key is to also balance some of the volatility that is the nature of the stock market. This is where concentrated equity strategies come in.
Concentrated Equity Strategies is a conservative approach to wealth preservation that does not incur losses against the falls of market price shares. Clients who own large amounts of equity and are not interested or unwilling in selling them can benefit from hedging which is an investment that reduces the risk of falling prices of an asset.
Invest in Stocks
Traditionally, stocks have been vulnerable to the rise and fall of market shares and inconsistent returns. With two recessions in the past fifteen years, the annual return on the S & P has been very low in comparison to its valued return.
To build a truly diversified portfolio that is driven by the goals of wealth preservation, one needs to look at the bigger picture. What is the cost of investment against the risk and return, inflation, interest rates and economic growth? Choosing the right stock portfolio also means focusing on the positive long-term, inflation-adjusted returns with as much stability as possible.
When it comes to choosing the right wealth preservation investment strategies, the key is to balance the risks for stronger returns taking into account a variety of markets.