It is possible to benefit from your wise decision to avoid negative risk. By the same token, you may encounter rewards for taking on positive risk. Knowing when to take on risk, and how much risk to take on, is the nature of risk management. The number one concept of risk management is first and foremost avoiding losses. For a more in-depth discussion see Risk.
WBC Risk Management focuses on fundamentals. We want you to take a supremely confident stance when making all financial decisions.
Once this principle of steady growth is fully grasped, you can then fully implement it with the strategy of Protect, Reserve, Invest. What we are doing with Protect, Reserve, Invest is taking care of the three main things you will be doing with your finances, in that order.
Each and every business or family requires a financial principle so that they can rely upon it to make confident, objective, and safe financial decisions. This is what the Steady State Principle provides when properly implemented with Protect, Reserve, Invest.
Opportunity cost is defined as the monetary cost to your future of doing one thing versus choosing to do another, better thing.
Opportunity benefit, on the other hand, occurs when you are presented with a good idea and then realize a gain because of it.
With the Steady State Principle, you can minimize or avoid opportunity costs, these occurring unknowingly and unnecessarily to you. At the same time, you can prepare for economic benefits of opportunities as they arise.
Please explore the three components of Protect, Reserve, Invest. These must work together for your plan to be optimal.
Think about this. It makes sense to finance as long as possible if you can receive a rate on that money greater than what you are paying out to the financing company. How much opportunity are you losing by doing the opposite of paying all of the money at once for a purchase? Put another way, what is the opportunity cost of not having access to all of that money that you just paid for a purchase? It is not only the money you paid for the item, it is what the money could’ve earned for you had you been able to keep it, i.e. compound interest is key.
Protect A loss is defined as a reduction in value to your property or financial assets that is caused by an unexpected, unintended, or overlooked event. The Store of Intrinsic Value is protected from loss by transferring this negative risk on to an insurance company. The intrinsic value of the insurance you purchase is exactly […]
Reserve Some portion of your funds will be reserved for your use in the future, as a ready source of capital for a project or for retirement. These funds are kept in an account called a reserve account. Reserve accounts constitute the central command of the Steady State Principle. This is the big dog. Reserves often […]
Invest WBC Risk Management is a discretionary asset manager registered as an Investment Advisor with the State of Tennessee Securities Division. In its fiduciary capacity, the firm of WBC Risk Management is granted permission to manage investments for the client by making informed decisions to purchase and sell securities in accordance with the client’s best interests […]