Posted on: 19th November 2024 in Investments
Managing your wealth is about more than just making money. It is also about having the right strategy to protect it.
Strategic asset management is a powerful tool for doing just that. It helps you make smart decisions, manage risk, and build a solid financial future. Here’s how to make it work for you.
So, what is strategic asset management? Simply put, it’s a way to plan and manage your investments to reach your long-term financial goals. This strategy involves making decisions based on your current assets, financial goals, and risk tolerance.
Strategic asset management isn’t just for wealthy people but anyone who wants to grow and protect their wealth.
One of the best ways to protect your wealth is to spread your investments across different areas, known as diversification.
By diversifying, you’re not putting all your eggs in one basket, so if one part of your portfolio isn’t doing well, others can balance it out.
Asset Classes: Include a mix of equities (shares), bonds, real estate, and alternative investments like commodities. This helps you balance risk and reward.
Geographical Diversification: Don’t limit your investments to just South Africa. International offshore investments can help you avoid risks specific to one country, like economic downturns or political instability.
Managing risk is vital when protecting your wealth. Start by understanding your risk tolerance.
Are you comfortable with some ups and downs in your portfolio, or do you prefer slow and steady growth?
Once you know your risk tolerance, you can choose suitable investments. But that’s not enough—you should also review your portfolio regularly. Markets change, and your financial situation can change, too.
Regular reviews help you stay on track and make adjustments when needed.
Taxes can take a big bite out of your investment returns, so finding tax-efficient ways to invest is essential.
Tax-Free Savings Accounts (TFSAs): In South Africa, TFSAs are a great way to save and invest without paying tax on interest, dividends, or capital gains. This makes them an attractive option for long-term growth.
Retirement Annuities (RAs): Investing in RAs gives you tax benefits now and helps you save for the future. Your contributions can be deducted from your income, which lowers your tax bill.
Estate Planning: If you want to pass your wealth on to your loved ones, estate planning is crucial. This can help you minimise estate taxes and make sure your assets are passed on smoothly.
No one likes to think about worst-case scenarios, but protecting your assets is essential.
Trusts and Legal Structures: Setting up a trust can protect your assets from legal claims or creditors. Trusts can also make passing wealth on to your heirs easier without going through complicated processes.
Insurance Products: Insurance isn’t just for covering everyday risks—it can also protect your wealth. Life insurance, disability insurance, and critical illness coverage can help you and your family in difficult times. They provide financial support if something unexpected happens, so your assets stay protected.
Inflation can eat away at your wealth over time. If your investments don’t keep up with inflation, your money loses value. The same goes for currency risk if you have investments in different countries.
Inflation-Protected Securities: To keep up with rising prices, consider investing in bonds or other inflation-related securities. These investments adjust with inflation and help you maintain your purchasing power.
Currency Hedging: Currency fluctuations can affect your returns if you invest internationally. Strategies like currency hedging can help reduce the impact of these changes and protect your investments.
Protecting your wealth isn’t just about making smart investments—it’s about being strategic with every aspect of asset management.
Diversify your investments, manage your risk, plan for taxes, and consider professional help when needed. By staying informed and proactive, you’ll be in a strong position to protect and grow your wealth.
Ready to take control of your wealth? You don’t have to do it alone.
A professional financial adviser can help you create and manage a strategic asset plan tailored to your goals. They bring expertise and an objective view, which can be invaluable.
Holborn offers a personalised strategic asset management plan tailored to your needs. Contact our team today to find out how we can help you.
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