You can lose your wealth in much less time than it took you to accumulate it. Economic hardships, financial market instability, legal claims against you, or unfavorable tax law changes could adversely affect your wealth. Poor investment decisions could have the same result. If you have substantial financial assets, you should regularly perform a risk assessment review to identify areas that may present a threat to your assets.
Excessive Investment Risk
As an investor, you want to earn a reasonable rate of return on your investments without exposing your portfolio to excessive risk. That requires you to determine your investment time horizon and risk tolerance. Ask yourself how long it will be before you need the money you’re investing. Then ask what impact a big loss would have on your future plans. With this insight, you’ll be more likely to invest your money in keeping with your risk profile and you’ll be less inclined to chase performance or follow investment fads.
Inadequate Insurance Coverage
Life insurance protects your loved ones in the event of your death. Your beneficiaries can use proceeds from life insurance for immediate cash flow needs, income replacement, and to pay any estate taxes that may be due.
Don’t forget to review — at least annually — the amount of insurance coverage you have on your home, vehicles, and other personal and business property. And umbrella liability insurance is a cost-effective way to protect your assets in case a lawsuit against you is successful.
Lack of Focus on Estate Planning
The laws that govern federal income-, gift-, and estate-tax rates — and the amount of assets that you may pass free of transfer taxes — change frequently. Many of these changes could have an impact on your wealth and the size of the inheritance you intend to pass on to your loved ones. To avoid unpleasant financial surprises, it makes sense to have your estate planning documents professionally reviewed on a regular basis and following any major life event.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.