Building wealth and achieving prosperity is a process that’s unique for everyone. The path to wealth creation takes twists and turns and some never achieve it, or at least don’t achieve what they originally set out to build. I don’t attach a specific number to wealth or prosperity. To me, wealth and prosperity are better defined as the ability to live the lifestyle of your choice, with or without earned income, rather than the accumulation of a specific amount of dollars. Getting there is great, but staying there presents some challenges.
Obviously, wealth can be eroded by capital markets and economic events that we have little to no control over. Hopefully, you’ve taken the proper steps to protect your investment accounts from market crashes, inflation, recessions, and other asset-damaging events. There are also several not so obvious asset-damaging events that we have full control over but may not always practice. Let’s consider four controllables that might help protect your wealth, prosperity, and lifestyle.
1. SPENDING: Remember who you were and how you lived while you were building your wealth: Fight the temptation to spend money simply because you can. Of course, you might buy a nicer car, a bigger house, or go on a few more vacations. Tomorrow is promised to no one, so enjoy life. Just remember what it took to get you where you are. Pay particular attention to the struggles and sacrifices you made while building your business or career. Let the desire to never have to struggle financially again guide your spending and lifestyle decisions.
2. RISK: Don’t take risks you don’t need to take: This is closely related to #1 above. Whether it’s expanding your business, investing in property, or any other major purchase or investment, do your due diligence. Involve your trusted advisors and listen to your gut. You probably stand to lose much more than you can ever gain by taking risks that you really don’t need to take to maintain your lifestyle. This doesn’t mean you can’t, or shouldn’t, take risks. It means you should take the time and involve the people in your life that you trust while making these decisions.
3. PROTECT: Prepare for the unknown and unexpected: That sounds kind of silly, doesn’t it? How can you protect yourself from the unknown or unexpected? You can’t completely. But here is what we know…people get sick, people become disabled, people die, and people sue other people. We don’t know if this will ever happen to us (unknown), and if it does, we don’t know when it might happen (unexpected). Don’t fail to plan for these unknown and unexpected events. Understand your state’s asset protection laws, maintain proper liability insurance to protect yourself and your business. And investigate adequate life, disability, and long-term care protection so that if the unthinkable happens, you and your family are protected.
4. CONTINUITY: Plan for succession and your ultimate exit from your business: Do you have a written plan in place that would provide for the continuation of your business if one of the unknown or unexpected events discussed above occurs to you? Do you also have a formal plan for your ultimate exit from your business? Most business owners don’t, and the result could be tragic. Planning and executing on succession or exit are two distinct and separate processes. Planning today doesn’t mean transition or exit tomorrow. What it does mean is an orderly transition or exit, whether by choice or necessity, when the time comes.
Achieving wealth and prosperity, however you define them, are satisfying and noteworthy accomplishments. However, once you get to the top of the hill, you have an entirely new set of responsibilities and challenges. How to maintain perspective and live the life you desired to build without compromising your values and the discipline you demonstrated on the way up the hill. You also must figure out how to maintain the wealth, prosperity, and lifestyle you built. Without discipline and proper planning, this can be as big a challenge as the pursuit of them.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
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