Teton Wealth Group’s founder, Clayton Alexander, was a guest contributor on Retirement Daily’s “Your Money” in November. Here is an excerpt from the story he wrote.
From one side of the country to the other, including severe storms that slam the east coast to wildfires fueled by ferocious winds in California, natural disasters highlight the need to be prepared for the devastation that can impact our communities. In the calm before any storm, though, there’s no better time than now to protect your finances and financial situation.
Regardless of where we live, complacency and procrastination aren’t luxuries many Americans can afford when it comes to catastrophes. Apart from the damages that perils like earthquakes, hurricanes and wildfires can inflict, there is also inland flooding, winter storms and the increasing losses from severe thunderstorms and tornadoes. It seems that few if any places in the U.S. are immune to natural disasters.
You don’t just need to insure your home, you need to insure your finances.
That’s only achievable through a holistic approach that includes insurance protection as well as emergency savings and portfolio diversification. From having adequate homeowners insurance to an emergency savings fund and plenty of cash on hand, we help clients look at their whole financial picture to help ensure they are prepared for any potential emergency.
Having three to six months of savings, or even more, can help pay the mortgage bills if you’re unable to work following a disaster. It can also cover expenses if you and your family need to evacuate, or pay for other unexpected financial emergencies. Knowing that you have money in the bank can partly alleviate some of the stress levels that might follow a disaster and provide the liquidity you need while insurers are investigating and processing your claim.
What if something unforeseen were to happen to you?
Would your family be protected? Could they handle the additional financial responsibility? You can purchase life insurance, and if you’re still young and in good health you’ll likely qualify for lower rates. Unlike mortgage protection insurance, which pays the remainder of your loan balance directly to the lender, life insurance is paid out to your beneficiaries and the proceeds are generally tax-free.
Diversifying your portfolio is critical.
Natural disasters also affect economies and financial markets, so it makes sense to have a diversified portfolio. Whether that means broad exposure geographically or across market sectors, diversification of risk is always an important factor in preparing your finances.
The professionals in the catastrophe-insurance business invest a great amount of time in scenario-planning and attempting to quantify their risks. Banks do the same thing when it comes to stress testing the impact of economic and market shocks on their fixed assets and portfolios. You can have your financial advisor perform a similar exercise for your investment portfolio.
There may be more risk than you think lurking within your portfolio. So be sure to get a second opinion from a financial advisor who understands how important protection and diversification is when it comes to portfolio design. Teton Wealth Group in Murray, Utah is a fiduciary firm which focuses on comprehensive retirement strategies to help clients effectively plan for income, tax efficiency and estate transition. You can reach us at 844-838-6600 (844-Teton-00) for a complimentary plan review.