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How to protect your personal finance

March 15, 2021
Personal Finance protection

Personal finance

Personal finance is a term that covers many aspects, such as managing your finances, various strategies for maximizing the value of your financial assets, retirement planning, saving, investing, insurance and tax considerations.

Of course each of these items is a universe of its own. For example if you engage with investing as part of your personal finance strategy, you might be investing in stocks, ETFs, commodities, bonds or cryptocurrencies, investing on your own or using a brokerage company, investing in startup companies, etc.

These seemingly different aspects have a common goal – maximizing and protecting your financial assets to ensure financial security and potentially financial independence.

Why does your personal finance need protection?

Very often when people speak about personal finance protection, they mean various methods and strategies to protect their financial assets against different types of threats:

  • Diversifying your investment portfolio for financial protection 
  • Using strong passwords which you frequently change and protect with password management service for cybersecurity
  • Using various insurances, such as life insurance, disability insurance, unemployment insurance and etc., to protect against different types of personal risks
  • Diversifying your income streams and including passive income, such as investments in startup companies as an angel investor, buying company stocks or investing in various types of funds – mutual, hedge, real-estate funds and etc.

The common thing about all these protection strategies is that they are based on the current reality and situation of the person. Many of them don’t protect against future or unexpected events.

You might think that insurance policies protect against future events. While that’s somewhat true, in reality even insurance policies, which are seemingly protecting against unexpected events, are not always what we think they are.

Let’s take for example life insurance. People make life insurance policies to protect their loved ones and ensure they are financially secure in the case of a life threatening event with the policy owner.

On the surface, that might seem like good protection, but now here is a $100 Billion question for you: are you sure that your loved ones would know where to find your life insurance and claim the insurance benefit?

You’d be surprised to know that insurance companies don’t have the legal requirement to inform the beneficiaries of the insurance policy in the case of a lethal event with the users, even if they are well aware of the event and the contacts of the beneficiaries. As a result, the so-called unclaimed assets are nearing $100B in the USA and £77B in the UK.

And these are only the assets returned to the governments and classified as unclaimed – you can imagine how many more are sitting abandoned in banks, insurance companies, trading platforms and digital wallets, before the legal term for declaring them as unclaimed expires.

And this is the case for life insurance policies. The other asset protection strategies, such as diversification of your portfolio, protection against cyber crimes and theft, diversification of the income – are all susceptible to unforeseen events and risks.

What might be the impact on my personal finance?

Lack of protection against unforeseen events and risks might result in losing all your assets.
For example your family members might not be able to identify and locate your assets and as a result they will stay in the companies which hold them, instead of reaching your loved ones.

In many cases the family members are not even aware of the very existence of all assets. The situation is especially relevant for expats, global citizens or people with complex and dynamic assets.

It’s important to note that people these days have way more dynamic assets than before – they move to new counties and open local bank accounts, insurance policies and pension funds, they decide to invest in company stocks or funds, make a small investment in a promising startup company, etc.

This is very different from 100 years ago, and while the opportunities in front of people are great, this also increases the risk that their family members won’t be able to identify and locate all these complex, dynamic and multi-country assets.

Best way to protect your personal finance

Protection against unforeseen events and risks should be an integral part of every personal finance strategy.

The best way to protect against such events and risks is to use digital inheritance asset protection services, which enable you to designate your loved ones as beneficiaries and ensure that they will be informed about their assigned assetsin the case of a fatal event with you.

Digital inheritance asset protection services achieve that goal through algorithms and protocols for detecting an unforeseen event, usually based on email and phone check-ups.

Some services also offer an integration with preferred social media platforms where the user’s activity is interpreted as an alive event.

These services enable the protection of your personal finance, required to ensure that your hard-earned money will go to your loved ones instead of being “inherited” by the financial institutions which hold them.

Peter Minev
Co-founder of DGLegacy®, the digital legacy planning and inheritance app that protects your assets and secures your family when it matters the most. Author of the book Building TECH. Learn more: https://topstrengthener.com/about-the-book/