Wealth protection & preservation is a strategy that keeps rich people rich by avoiding investment risk, risk of lawsuits, and risk of financial loss due to death and others. The following is a detailed explanation of wealth protection and preservation.

What is Wealth Protection & Preservation?

Wealth protection & preservation is a part of wealth management.

The following is an explanation of wealth protection & preservation from several sources:

Porzio Bromberg and Newman Wealth protection & preservation from a legal perspective is an educated process and entails making decisions about potential legal issues that might affect an individual's wealth.

John Jennings (2021) Wealth protection & preservation is essential because every wealthy person is aware that while they create wealth, there is also a potential risk of loss. Therefore, they seek to safeguard their wealth through wealth protection and preservation.

Risk Management

In life, there will always be risks. Risk cannot be eliminated completely; it can be mitigated.

According to the Merriam-Webster dictionary, Mitigation is defined as: "The process or result of making something less severe, dangerous, painful, harsh, or damaging."

Risk mitigation can be interpreted as a process or action to reduce the impact of losses from an incident. In general, risk mitigation can be accomplished using four strategies:

Information

• Severity = how severe or how big the loss is.
• Frequency = how often.

Retention

If the risk occurs frequently and the impact of the loss is small, the risk should be retained.

An example is the risk in value reduction of safe haven assets (e.g., Indonesian government bonds or gold). Risk retention can be performed by investing in the short-term (2-5 years), medium-term (5-10 years), or long-term (more than 10 years).

Loss Prevention and Retention

If the risk occurs frequently and the impact of the loss is significant, the risk should be either avoided or retained.

An example is the risk of a decline in a stock's daily price or mutual fund. Retention can be implemented by diversifying investments and investing in the short-term (2-5 years), medium-term (5-10 years), or long-term (more than 10 years).

Risk Transfer

If the risk is rare, but the impact of the loss is significant, the risk should be transferred to a third party (e.g., insurance). Of course, paying a certain amount (called a premium) is necessary to share the risk.

An example of this risk is if the breadwinner of a family dies and leaves behind some assets (e.g., property).

When a person dies, they cannot immediately liquidate assets invested via banks and other financial products. The deceased's family must undergo a lengthy process to take care of legal documents related to inheritance and heirs.

Processing these documents certainly requires a substantial amount of time and money. The greater the assets left behind, the longer the time and the greater the cost. To mitigate this, they can obtain life insurance to cover document processing fees.

Risk Avoidance

If the risk occurs frequently and the impact of the loss is significant, the risk should be avoided.

An example of this risk is the fluctuations in the trading price of small-capitalization stocks (shares with a market capitalization of less than IDR 1 trillion). This risk can be avoided by not investing in small-cap stocks.

Wealth Protection & Preservation Strategies

Several wealth protection & preservation strategies are as follows:

Health Protection

Investors can utilize insurance products such as:

• Health insurance: to finance medical and hospital care expenses.
• Critical illness insurance: to pay for medical expenses not covered by health insurance (alternative medical care) and income replacement during treatment.
• Life insurance: to compensate for financial losses when someone dies (paying debts, income replacement, funeral/cremation costs, final medical expenses, children's education, or costs for taking care of inheritance).

Legal and Inheritance

Investors can consult a notary or lawyer to protect legal aspects:

• Designating a legal entity (Limited Liability Company/PT) to secure personal assets.
• Using a prenuptial agreement for the separation of assets.
• Creating a will or testament.

Taxes

Investors can consult a tax expert or consultant to avoid errors in tax reporting or underpayment of taxes which can have a negative impact.

Business

Investors can consult a business consultant to arrange a leadership succession program in the business.

Investment

We can implement risk management by diversifying investments according to investment objectives. As the old saying goes in investing: "Don't put all your eggs in one basket."

Investment products can be classified based on the following:

• Investment period: short, medium, and long term.
• Investment function: generate capital gains or cash flow.
• Asset types: tangible assets (property, gold), paper, and digital assets.

You can start implementing wealth protection & preservation by contacting a wealth advisor for suitable recommendations.

How to Register as a Wealth Management Client

PT Moduit Digital Indonesia is an investment advisory company under OJK (Decree: KEP-30/D.04/2019).

Moduit Beyond is a priority service from Moduit that provides Wealth protection and preservation management. Your account will be handled by a wealth advisor with more than 15 years of experience in the industry.

Becoming a Moduit Beyond client is as simple as completing a brief registration form. Initial investment starts at IDR 1 billion. The benefits of becoming a Moduit Beyond client include the following:

• Personal advisor
• Curated financial products
• Priority access for newly launched products & services
• Daily reports on the market
• Priority call center
• Exclusive lounge access
• Year-end gifts You can become a Moduit Beyond client by contacting us on this form or contacting a Moduit Beyond advisor partner.

Reference sources:

• Porzio Bromberg and Newman. Wealth Preservation. Pbnlaw.com
• John Jennings. 30 Juni 2021. Preserving Wealth Is A Very Different Discipline Than Creating It. Forbes.com
• Merriam-Webster. Mitigation. Merriam-Webster.com