3 Financial Risks You Can Avoid by Utilizing a Solidly Built Life Insurance Retirement Plan (Lirp)

If you haven’t already built a retirement plan, it’s time to get started.

Something that wealthy elites know (that most Americans don’t know) is what financial habits and risks to avoid—and which ones to take advantage of—to build wealth for retirement.

Here are 3 financial risks you can avoid by utilizing a solidly built Life Insurance Retirement Plan (LIRP):

Tax Risk

Taxes are a part of every aspect and stage of our lives. From sales tax to property tax to income tax, it’s an unavoidable duty.

To top that, with taxes comes uncertainty. You don’t know how much taxes you will have to pay in the near future.

Here’s a tip: eliminate tax uncertainty by utilizing Life Insurance Retirement Plan. It is a method where the money you grow inside can be tax-free forever. LIRP is a cornerstone of every family’s financial future. Using LIRP can help eliminate any tax and market uncertainties in the future.

Market Correction Risk

People invest money and chase the hype, looking for more and more returns. Eventually, this hype becomes irrational to the point that the market corrects, or experiences a decline in value.

If you are near retirement, you should be aware of the potential of a market correction. If there is a market correction during your retirement year or month, your retirement fund will look dramatically different.

Here’s a tip: when choosing your investments, make sure you have minimum returns. The minimum return should be between 0-0.75%. If the market crashes, your money will still make 0.75%. Without minimum returns, an investment that earns 10% one year and loses 40% the next year will give you an overall loss of 34% (not just 30%)*. With minimum returns, it guarantees a return, even if it seems insignificant. You are still making a little bit of money, even when other investors are losing.

*Assume you invest $100 and it earns 10% in Year 1. You have $110 at the end of the year. In Year 2, the investment goes down by 40% and you lose $44. Your net loss over two years is $34 ($10 – $44), which equates to 34%, not just 30%.

Inflation Risk

Inflation risk means your money is worth less overtime because the government keeps printing money and the same amount of money buys you less goods and services.

Your money needs to outgrow inflation—it should not lag behind it. That’s why it’s important to invest wisely, rather than following the hype or speculation. The returns you get with your investments mirror how the market index performs, which helps you hedge against inflation.

Here’s a tip: don’t leave money sitting in your checking account. It won’t earn any interest and will lose value overtime. If you have extra money leftover, invest it. Here’s a visual representation of how much your money will grow if you keep it in your checking account versus investing it:

Simply put, the more you invest today, the more you’ll have when you retire.

Build A Tax-Free Retirement with Financial Educator Rick Kam

There are far more risks where these 3 came from. Like any good financial educator will tell you, your financial situation is unique and you need a customized financial plan to achieve your retirement goals.

Born in Hong Kong and raised in Vancouver, Canada, Rick Kam always had a desire to create a legacy he could call his own.

In 2018, Rick got his licenses and became a financial educator.  Then in 2019, he founded Aulegatum Financial Partners. Since its birth, Rick has helped many of his clients build a golden legacy with Aulegatum’s financial services. Rick currently resides in the US with his wife and baby boy.

To learn about the other financial risks to avoid and how to build a tax-free retirement, reach out to Rick Kam.