Know your risk. Protect your assets. Make a plan.
In any given situation in our lives, we are faced with numerous risks. Without knowing it, we apply risk-management tactics. With risk management, we are preparing ourselves so we can either avoid the risk altogether or have a plan in the event that things go wrong.
One of the most important factors in our lives that could use a risk-management plan is our money. All wealthy investors need to protect their private assets. As a savvy investor, you should be fully equipped with a plan to combat the many kinds of risks out there. Goldbach Capital is prepared to create that plan with you.
Risk management can be applied to your personal finances, managing your business, and family investing. Applying a risk management strategy to your financial plan, you can protect your assets to the best of your ability. Be knowledgeable of the risks you are facing, and how to handle the situation if you encounter them, you can be equipped for success.
Unfortunately there is not one risk-management plan that can protect everyone. It requires the watchful eye of a professional. Goldbach Capital is equipped to prepare you and your family with protection from cyber, fraud, and organizational risk.
Identifying the Risk
The first step in risk management is going to be identifying the risks your assets and investments are susceptible to. There are numerous risks to be aware of, including the following:
• Liquidity risk- when products aren’t selling fast enough to cut losses.
• Credit risk or default risk- when those who borrow money are unable to pay back the loan. These people go into default. Investors who are subject to credit risk can be hit by decreased income or a rise in costs for collection.
• Asset-backed risk- when securities backed by assets become volatile if the securities change in value.
• Foreign investment risks- while investing in a foreign market, you are putting yourself in the hands of political change, natural calamities, diplomatic changes, or economic conflicts.
• Equity risk- volatile price changes of shares of stock.
Educate yourself on what you may be up against as if you are going into battle. Equipping yourself with the right weapons to target the enemy’s weaknesses will heighten the chances of a successful fight. Having a list on hand of what can happen when investing in important assets, like human error, the health of the market, or any potential outside risks.
The step of identifying the risk also includes measuring the financial risk. How much of a hit will you take if something goes wrong? To calculate this, you will most likely need the help of a professional. A financial expert, such as the team at Goldbach Capital, can use statistical models to calculate the numbers.
Though this can be a more difficult step in the process, it is the most important. Knowing exactly what you are up against is the best defense.
One of the easiest ways to protect your assets and investments from risk is to diversify your income. There is always the possibility that one of your sources of income may take a drastic hit. If you make all over your family investments into one sector, you are opening yourself up to an array of events and certain markets may not be as strong as others.
Real estate, for example, may crash in a certain jurisdiction. By making real estate investments in more than one region, or choosing a different sector altogether, you are protected from the failing market. The hit you take will not be as bad since you made a risk management plan with an expert.
Diversifying your portfolio is one of the most well known and reliable risk management strategies. By having multiple different sources, you can rest easy when one of your investments falls through.
More Tips on Risk Management
• Educate Yourself and Be Careful- Never make an investment without learning as much as you can about it. It can be easy to fall into a scam but it won’t be as easy to recover. It can make a big dent in all of the work you have done to get your wealth to where it is today.
Read any contracts carefully. Make sure you and your advisor fully understand what you are investing in and that everyone is on the same page. Being lazy can make a big difference. By simply reading and understanding the investment can help you avoid risk.
Take the time to learn about the opportunity, through investment websites, books, articles, and the help of financial experts. By getting a grip on different kinds of investments, and the lay of the land, you can avoid getting burned by greed.
• Keep an Emergency Fund- It will never hurt to have money saved up in a backup fund. Saving a percentage of your monthly profits, it will be much easier to recover from a large hit if a risk occurs.
• Insurance Policies- Another effective risk management strategies is investing in an insurance policy. When one invests into an insurance policy, they are protecting themselves from outside risks like crimes. A health insurance policy will guarantee savings when you aren’t spending too much on health care.
Goldbach Capital has developed a strong expertise in risk management. All clients’ portfolios are managed according to predefined risk profiles, which are constantly monitored.
The procedures to ensure that portfolios are in conformity with the required risk profiles have been defined based on the most recent and accurate requirements of the Swiss and international financial authorities.
Furthermore, as a fully independent company, Goldbach Capital relies on a network of first-class custodian banks, which all maintain efficient in-house risk management and compliance departments.
These custodian banks are subject to formal supervision by their local financial authorities. Goldbach Capital’s clients, therefore, benefit from complementary risk monitoring and compliance services, often in two different jurisdictions.