Protect your Wealth, Health and your Children
How to Become an Investorgetic®. The secret to becoming a Millionaire Series - Part 7
Before I start this blog, I want to make sure you know what an Investorgetic® is. An Investorgetic® is a persona I created while writing Money Intelligence to counter the Consumerholic persona in our society. It's a term I coined that's made up of 2 words: investor and energetic. It means someone who is passionate about investing to build their wealth in a sustainable way.
Expect the unexpected: Protect your assets
Nothing in life is certain, and this is especially true for your finances. No matter how much you save or plan, sometimes things go awry. But there are steps you can take now to minimise the financial damage as much as possible.
Your wealth, health and family are intertwined. When things go haywire in one area, the others are impacted as well. If you neglect to safeguard all three areas, your future prosperity is compromised.
Protect your wealth
When you’re focused on building your savings, protecting your wealth is often an afterthought. But if something unexpected happens, all your hard work and assets can go down the drain. It’s important you set up wealth protection mechanisms now to save yourself financial headaches in the future.
· Get income protection: Your income is your most valuable asset. Most people insure their homes, yet fail to insure the highest income earner in the house. If you borrow to buy a home and invest, you cannot ignore income protection. It is usually covered under your name and the premium is tax deductible. Insurance companies often cover you for 75% of your gross income.
· Life insurance and total permanent disability (TPD) insurance: Life insurance protects your family if something happens to you as an income earner. TPD insurance covers you if you have an accident and can no longer work. These insurances are usually covered by your superannuation fund.
· Get trauma insurance: If detected early, you could survive a serious illness such as a heart attack or cancer. However, would you be able to survive financially after paying the medical bills and taking unpaid leave from work? Trauma insurance usually covers medical bills and the 25% shortfall not covered by income protection insurance. Trauma premium is not tax deductible, but the payout is free if claimed.
· Keep your debt level under control. An Investorgetic® doesn’t borrow more than he or she can repay. Most people borrow the maximum the bank is willing to give them. However, the bank’s method of calculating what you can afford is based on a formula that changes depending on whether the economy is running under a tight or easy monetary policy. You need to work out how much debt you can comfortably tolerate, rather than jump at the maximum the bank offers you.
Protect your health
What is wealth without health? And how much will poor health cost you in the long run? No matter how much money you earn, you must be happy and healthy.
How many times have you worked overtime, skipped meals and exercise, opted for unhealthy foods, or missed important family events in the pursuit of earning more money? It’s easy to lose sight of what is truly important to us when we want to achieve our financial goals.
Your financial success depends on your mental health and physical wellbeing. If you continually ignore your health, you risk physical or mental meltdown.
Make your health a priority. Exercise every day. Eat well, drink plenty of water and make time for family and friends. You’ll have more energy, be happier and save on medical bills in the long run.
Protect your children
I have heard horror stories of children not receiving their inheritance because their parents’ will was ambiguous, changed by other family members or not made at all. It’s vital that you make a will to protect your children and their interests.
When your circumstances change, your will is often the last thing on your mind. But it should be one of the first. If you remarry, ensure your children from your first marriage are looked after in your will, should anything unfortunate happen to you.
There are a number of legal and tax structures that allow you to pass down your family’s wealth. These include:
· Family trust
· Self-managed super fund
· Investment companies
Seek legal and accounting advice when setting up these structures, and make sure they are aligned with your will.
Next week in the Investorgetic® series, I will show you how you can create your blueprint for financial liberation.