Diversification: How to safeguard assets in the long term
For those who handle their assets responsibly, risk diversification is a must. Not only since the financial crisis of 2008, the real estate crisis or the last oil crisis, we are aware that our assets and savings in the savings account are not necessarily safe. World political crises, a change in the politically intended Financial realignment or the disappearance of entire markets make it imperative not only to rely on traditional savings deposits at the “savings bank” next door, but to invest one’s own assets diversely and , if possible, internationally. The aim of so-called diversification of assets should be to protect and ideally expand one’s own possessions from third-party access and decline in value in a long-term, profit-oriented and crisis-proof manner.
The types of risk diversification
The term risk is extremely fuzzy, because risk does not mean the same thing to everyone. Nevertheless, various parameters or risk factors can be used to derive where assets are at risk and which countermeasures or precautions prevent this.
An example to illustrate: a safe and an alarm system could be Cash assets or valuables the risk of a robbery and thus the risk of a loss. Loss of all assets prevent, so you can spread the risk by using different locations to Safes to store the cash assets and thus protect them from access by third parties.
Thus, risk diversification is as individual as the perception of risk itself.
The following basic types of risk diversification can be roughly distinguished:
- Geographical risk diversification: Here, one’s own assets are spread across national borders or even continents.
- Investment risk diversification (asset diversification): This means that you do not back just one horse when selecting your investments, but rather choose a good mix of risk and security, for example when dividing your investments between real estate, securities and commodities.
- Investment-specific risk diversification: This means that you diversify within one type of investment. For example, you can trade classically in stocks or put a portion of your assets into ETF savings plans.
Of course, there are other ways of risk diversification and various possible combinations of the above. Likewise, there are also tax and legal risks, including the risk of change. An individual consultation and assessment is indispensable. In addition to safeguarding your assets, it is also very important to consider your personal goals – What strategy do you use to address the issue of risk? Feel free to contact us!
How we advise you on risk diversification
- Legal and tax planning for asset protection
- Internationalization of your assets
- Advice on foundations and holdings
- Analysis of existing investment forms and evaluation
- Examination of the legal security of installations at home and abroad
- Strategy for building up crisis-proof fixed assets
- Legal assistance in the event of incorrect advice
Helpful articles on risk diversification:
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About the author
PhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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