We live with risk every day. Risk cannot often be eliminated completely. It can sometimes be minimized and/or managed. Often financial risk can be transferred by the purchase of insurance.
The Natural Wealth® Process breaks the Risk element into three categories:
- Person Risk
- Portfolio Risk
- Possession Risk
Person Risk is made up the risks we face as persons; as individuals and families. It is the risk of getting sick or hurt or of dying prematurely. Person Risk is at its highest when we are younger and have lower levels of Portfolio Wealth. Without sufficient assets that can generate income without our drawing on our own capacities, capabilities and connections, we are at personal financial risk. If we have a spouse and children, the financial risk expands to include our family.
Portfolio Risk is the risk inherent in our financial assets and, if applicable, in our business and/or real estate assets. Investment markets go up and down and can cause volatility in our investment portfolios. Businesses face a myriad of risks in their day to day operations; the economy, competitiveness, personnel, fire or other damage to equipment and facilities, liability, theft to name only a few. Real estate investments face many of the same risks as businesses.
Possession Risk is made up of the risks associated with owning possessions. Houses, cottages/camps, vehicles, boats, recreational vehicles and other possessions are all at risk of destruction or damage. We are also exposed to liability in the event that someone suffers harm or worse while using or in the presence of our possessions.
The Natural Wealth® Process helps clients understand the impact of risk in building and managing a successful financial life plan. The Natural Wealth® Process then helps clients identify risks and develop strategies to manage risk and where necessary, transfer risk through the use of insurance products.
The heart of the Natural Wealth® Process is Vision. A clearly articulated Vision and clearly stated life goals are essential to an effective financial life plan.
The Natural Wealth® Process focuses on three types of wealth: person, portfolio, and possession.
Tax and Estate
Taxes are a fact of life in Canada, as they are in most other developed countries.
Cash and Cash Flow is “Vision” fuel. After tax income from employment or self-employment, and/or from portfolio investments can be spent or saved.