Wealth Management Risk Distribution
The management of our own wealth is fundamental for our old age and happy retirement. If we are able to manage in the right way the growth of our wealth taking under control the risks that during the year we can ensure a magnificent life. It’s imperative, especially for the young people, to plan the present and the future expenses to manage the money need for a good quality of life and not spend all the cent they have in their wallet.
NOT ONLY CRYPTO But save a percentage of own revenues is not enough if we invest these assets in a wrong way. I see many projects in the crypto business that propose itself as Wealth Management platform, using the token to dis-intermediate the real money and real assets. I’m a crypto fan, and I believe that this new technology will disrupt the actual business models, but I work in the financial industry from more than twenty, and I think that there is some fundamental concept that can be changed.
THE FIRST PILLAR IN INVESTMENTS I’m speaking about the “diversification” on the investments; it’s very reasonable to make many different small investments to reduce the specific risks. The specific risks are the risk related to a single asset of investment, for example, if I invest all my money in an only Bank and its name is Lehman Brother (just for example), I can lose all the money I saved during my life.
SYSTEMATIC RISK But in the investments field, there is an excellent number of Risk, another significant risk is the so-named Systematic Risk; this risk is related to the market or to the Asset where I invest. For example, if in 2007 I had invested all my money in Equity market I suffered a loss of 50% of my portfolio also if I made a proper diversification in many stocks to reduce the specific risks.
CONSOLIDATE YOUR LUCKY I knew in the crypto business many people that invest all their own wealth in the crypto, this behaviour has allowed many people to become a millionaire, and this is amazing. But they are all exposed to a substantial systematic risk that can destroy their future if this kind of business will be reduced for any reason like the new economy bubble during the “.com” period.
BE CAREFUL So for my point of view, is not possible give the name of Wealth Management to a project or ICO that allow the people to invest in crypto or tokenised asset, because these platforms are exposing their client to a significant risk that can destroy more than managing the Wealth of the person.
HYBRID MODEL A real Wealth Management company has to allow the clients to invest both in the real and crypto asset, with both fiat currencies and cryptocurrencies, but also in commodities, in the bond market, equity market and all the investable products that the traditional industry create during this year.
TWO CENT So my two cent about this topic is to follow a simple rules for manage your own Wealth, use a significant diversification in the investments and use a decreasing logic, as the image in the beginning of the post, for the amount you will use for the short-term speculation (as crypto asset are) during your life. The only platform where Hybrid Investments will be possible is www.phitoken.io that will be ready in a few months. DB