Over time, we have seen so many wealthy people in the nation go bankrupt, or at least lose a considerable portion of their wealth. There are various known examples of sports celebrities and movie stars going bankrupt across the world. Such types of stories are not limited to just famous people.
We have seen the common middle-class men suffering as well. So whether rich or the middle-class, this is perhaps one of the most devastating experiences to go through, especially when you have worked hard all your life to reach to acquire this status, and then see all your monetary achievements disappear slowly. Something like this can really be termed as a catastrophe.
This blog will now present some ways to prevent this.
Some steps that may prevent such catastrophic wealth collapse
- Stop buying things on a whim
One of the most common reasons for this state of financial health is the habit of making whimsical financial decisions. It can be an asset or maybe an over-aggressive business plan. Do take time while deciding. Discuss with actual financial experts like Wealthclock Advisors before committing to any large financial commitment.
If you analyze carefully, you may not need such a huge financial commitment or, it may sound risky. Instead, you can use your money in fruitful investment tools like mutual fund investments.
- Stop over-leveraging
One of the major reasons for bankruptcies is through borrowing beyond what is needed or deemed normal. This can be for both professional and personal reasons. Once you have a specific amount of wealth, avoid borrowing completely. Even when it comes to your business, it is vital to keep overall borrowing to just minimum levels.
Borrowing, at best, should be limited to cash flow planning. Borrowing may land you in debt and this, in turn, will restrict how you spend money on different things.
- Plan the portfolio well
Your focus should be on inflation-beating assets like mutual funds. Equity funds should be an important component of your portfolio. Avoid leverage in your investment portfolio. Too little risk or too much risk are both not optimal. You must have a reasonable mix of debt, equity, and other components in your portfolio based on your general comfort level.
So, these are some steps that you can take to ensure you don't face a disastrous wealth collapse and go bankrupt like a lot of people do!
No comments:
Post a Comment