What Could Go Wrong? Protect Yourself From Financial Risk

When you think about the biggest sources of stress in your life, what comes to mind? If you’re anything like us, we’re betting money lands somewhere near the top of that list. We all have bills to pay and things we want to do, and the threat of losing money can ruin lives faster than just about anything else.

There are several steps you can take to lower your financial risk and stop stressing so much about money. Read on to learn more about financial risk and how you can protect your investments and assets the smart way.

What Is Financial Risk? 

Before we dive into all the different ways you can manage your financial risk, let’s talk some about what it is. In basic terms, financial risk is the chance that you might lose money on an investment of some variety. This can include everything from a business venture to shares you own in the stock market and more.

All of us will experience financial risk at some point in our lives. Whether that be worries about our house value going down, losing our jobs, losing retirement money, or going into debt, living in today’s society means taking on financial risk. Learning how to manage it can help you to maintain healthy finances throughout your life. 

Asset Diversification 

One of the best ways you can help to reduce your financial risk is by diversifying the assets you have. For instance, let’s say you have $1,000 to invest in the stock market. If you put all that money into one stock and that stock crashes a week later, you’re out your $1,000 and possibly more. 

When you diversify your assets, you minimize the chance that one singular event will destroy your investment plan. While this should include investing in a variety of stocks, it should also mean investing outside the stock market. Put some of your money into things like real estate, government bonds, long-term savings accounts, and so on.

Automatic Saving

Automatic saving is another great way to reduce your chance of losing money on your stock market investments. In essence, this risk management strategy involves optimizing the amount of money you spend on stocks and maximizing your returns. The theory is simple – you buy stocks when their prices drop and sell them when they increase to a certain level.

Automatic saving can help to lessen your financial risk by lowering the amount of money you have to invest in each stock in the first place. Of course, these stocks could still trend down, but in general, if you hold onto a stock for long enough, you’ll make money on it in the end. Buying low and selling high can give you a larger financial cushion to support you during any crashes.

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Additional Income Streams

One of the biggest sources of financial risk for most people is the chance that they might lose their job. As many of us discovered in the last two years, jobs can vanish in the blink of an eye, and it can be incredibly difficult to find work again. You may be left stuck without a paycheck for months while the bills continue to roll in.

One way to reduce the risk associated with losing your job is to cultivate other income streams. Smart investing can be a great way to set up passive income streams that can help to support you even if your main paycheck goes away. You may also consider writing an ebook or starting a website to keep cash flowing in from a variety of sources. 

Debt Elimination

If you do happen to lose your job, you’ll soon discover that any debt you have is an enormous anchor tied around your ankle. Credit card debt, student loans, car notes, and mortgages are one of the most common financial problems and are a challenge to pay off under the best of circumstances. When you’re stuck between a rock and a hard place, there’s no way to cut back to make these payments more affordable.

If you carry any debt, work to eliminate it as soon as possible. You may want to start out by making the minimum required payments on all your debts and dedicating any extra money to paying off your smallest debt. When you get that paid down, roll the money you were dedicating to that expense into the next-largest debt and so on until you’re back in the black. 

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Retirement Planning

None of us wants to work until we die, and retirement planning is what makes our golden years possible. If you don’t start looking at those long-term financial goals, you’ll have to live with the financial risk of losing your income source for the rest of our life. A solid plan can make sure you can spend your last years relaxing and enjoying the fruits of your labor instead of trying to keep up with the rat race. 

If your job offers a retirement plan, make sure you’re contributing as much to it as you can afford to. If they have a matching program, at least contribute the maximum amount they’ll match. And talk to a financial advisor about the best way to save for your retirement so you can maintain your lifestyle even after you leave your job.

Learn More About Financial Risk

Financial risk is an unfortunate fact of life, but you don’t have to be stuck with it forever. Work to diversify your assets and find passive income streams that can help to supplement your primary income. Set up automatic savings measures for your stock profiles, work to eliminate any debt, and start planning for retirement as soon as possible.If you’d like to learn more about how to avoid financial risk, check out the rest of our site at Bogart Wealth. We believe that when it’s time to plan for retirement, transfer your wealth to the next generation, or investigate your best options, you should ask tough questions. Contact one of our advisors today and discover why, at Bogart Wealth, there is no question about trust.


Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bogart Wealth, LLC [“Bogart Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bogart Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bogart Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.bogartwealth.comPlease Note: Bogart Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bogart Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a Bogart Wealth client, please contact Bogart Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

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