You’ve worked hard to build your wealth, so protecting it should be a top priority, especially with today’s unpredictable economic climate. With ongoing inflation, market volatility, and global uncertainties, relying solely on traditional investment strategies may not be enough. To keep your wealth secure and growing so you can successfully pass it on to future generations, you may need a more thoughtful and resilient approach. In this article, we’ll discuss three key strategies to help you preserve your wealth.

1. Diversify Beyond the Basics

We’ve all heard the saying: “Don’t put all your eggs in one basket.” That’s what diversification is all about - spreading your investments around to lower your risk. But for high-net-worth individuals, diversification should go further than just owning a mix of stocks and bonds. Here are a few ways you can further diversify your portfolio:

• Go Global: Spread investments across different countries and regions. Investing in other markets helps you avoid being hit too hard by problems in any one region. When one market faces challenges, others may remain stable or even thrive.
• Balance Traditional and Emerging Opportunities: Allocate portions of your portfolio to established sectors like commodities, blue-chip stocks and government bonds while strategically investing in forward-looking areas like renewable energy, healthcare innovation, or emerging technology. Combining proven investments with carefully selected emerging sectors gives you both stability during market turbulence and the potential to benefit from the drivers of future economic growth.
• Maintain Strategic Liquidity: Keep some of your wealth in cash or easily accessed liquid investments. This serves two purposes: to shield a portion of your wealth from market declines and to enable you to act quickly when buying opportunities or unexpected expenses arise. Maintaining some liquidity protects you from potentially having to make the difficult choice of selling long-term investments at a loss when you need immediate access to funds.

2. Strengthen Your Portfolio with Alternative Investments

Alternative investments operate differently from traditional stocks and bonds, which could provide valuable stability during market volatility and economic uncertainty. Keep in mind that they may be riskier than traditional investments, have higher fees, and may not be liquid. Here are a few examples that high-net-worth investors often use:

• Private Equity Funds: These funds invest in private companies that aren’t listed on the stock market. They often focus on long-term growth and can potentially offer higher returns than traditional investments, though they typically require a longer commitment of capital.
• Real Estate and Infrastructure: Investing in properties that generate rental income or large-scale infrastructure assets such as toll roads, airports, or data centers can provide reliable monthly income while helping protect your wealth against inflation. As prices rise over time, both the value of these physical assets and the income they produce typically increase as well.
• Hedge Funds: These are professionally managed investment funds that use a wide range of strategies to try to make money in both good and bad markets. Unlike regular mutual funds, they can invest in almost anything - stocks, bonds, currencies, or even bet against the market to help reduce risk and aim for steady returns.
• Art, Collectibles, and Other Tangibles: Owning high-quality items like artwork, rare jewelry, or classic automobiles is an investment that you can actually use and enjoy. Tangible investments often maintain their value during financial uncertainty and potentially increase in value over time. However, they may require specialized knowledge for selection/purchase, proper insurance coverage, secure storage, and will need to be sold through the right channels to maximize returns.

3. Manage Risk with Strategic Protection

Protecting your wealth is about more than smart and diversified investments, it requires proactive planning to guard against various legal, tax, and other external risks. Here are some smart ways to do this:

• Legal Safeguards: Establish protective frameworks like trusts or family business structures that separate your personal assets from potential threats. These arrangements work like a shield, keeping your wealth safer from lawsuits, creditors, or even a divorce or other family dispute.
• Comprehensive Insurance Coverage: Make sure your insurance matches your level of wealth by securing policies that cover what you own and your true risk level. This means sufficient health and auto coverage, having enough life insurance to support your family in the event of an untimely loss, disability and long-term care insurance, property coverage for all your valuable possessions, extended liability protection (AKA Umbrella coverage), and specialized policies for unique items. The right coverage prevents a single unfortunate event from creating lasting damage to your wealth.
• Digital Security: Protect your online financial life with the same care you protect your physical assets. Wealthy individuals are prime targets for cyber criminals and identity theft schemes. Implementing strong passwords, multi-factor authentication, secure networks, and regular monitoring of accounts helps ensure criminals can't use technology to access what you've worked so hard to build.
• Smart Tax Planning: Work with experienced tax professionals who can guide you through complex tax laws to protect what you've built. Their expertise can uncover legitimate opportunities to minimize your tax burden and help you make informed decisions that align with your goals. This will help ensure more of your assets reach the next generation.
• Family Financial Education: Many fortunes disappear within generations because inheritors weren't prepared for the responsibilities that come with inheriting large sums of money. Protect your wealth even after you’re gone by ensuring your heirs understand how to manage, grow, and protect the assets they'll eventually receive. This transfer of knowledge could be your most valuable legacy.

In an uncertain world, protecting your wealth is about being informed and prepared. The traditional ways of investing may not be enough anymore, especially when you’ve built substantial assets. By diversifying beyond the basics, strengthening your portfolio with alternative investments, and managing your risk with strategic protection, you can help ensure that your wealth lasts and grows for generations to come.
If you’re looking for guidance on how to grow and protect your wealth, contact a professional who can help you today.