$1.9B Omaha private bank team joins Private Wealth. Meet the team here →

private wealth

Investment Strategies to Protect Family Wealth

family wealth planning

What Is Wealth Protection?

Whether you’ve spent years diligently accumulating your assets or have recently come into a substantial windfall, it’s crucial to understand how to safeguard and preserve your hard-earned wealth. This is an important step to secure a prosperous future for you and your loved ones.

Wealth protection refers to the strategies and measures taken to safeguard and preserve family assets. It involves various financial management techniques and strategies aimed at minimizing risks and maximizing the security of personal finances.

Why Is It Important to Have a Plan in Place to Protect Your Wealth?

Markets can move quickly, and without a solid wealth preservation plan, you are vulnerable to financial instability. That could create difficulties in passing on your wealth to the next generation.

In addition to market forces, tax laws change regularly. This can have a significant impact on your financial situation. For example, expected changes to estate tax laws will affect the amount of exemptions. With a wealth protection plan, you can prepare for changes, make tax-conscious adjustments and reduce your overall tax burden.

What Investing Strategies Can Help Protect Family Wealth?

By diversifying your investment portfolio and staying informed about market trends, you can mitigate potential losses. Regularly reviewing your wealth management plan with your advisor can give you the opportunity to take advantage of sound strategies at the right time. Here are several we are currently considering:


Interest rates are currently at a level we won’t likely experience again for a long time. Despite a tough year in 2022, investing in bonds is still a valuable strategy for wealth preservation. Here are some advantages of including bonds in your investment portfolio:

1. Income Generation: Bonds provide a steady stream of income through regular interest payments. This can be particularly beneficial for families looking to preserve their wealth while generating a consistent source of income. 

2. Diversification: Adding bonds to your investment portfolio helps to diversify risk and minimize the effects of market fluctuations. Bonds typically have lower volatility compared to stocks, providing stability to your overall investment portfolio.

3. Capital Preservation: Bonds are considered relatively safer investments compared to stocks. They offer regular interest payments and have a predetermined maturity date at which the principal amount is repaid. This can help protect your wealth from market downturns and preserve capital.

4. Liquidity: Bonds are highly liquid assets, meaning they can be easily bought or sold in the market. This provides flexibility and allows you to access your funds when needed. 

5. Investment Options: Bonds come in various types, offering different characteristics and benefits. Government, corporate, municipal and treasury bonds are some examples of the types you can consider for your portfolio. Different types have different risks and return expectations, so you can choose the best options for your risk tolerance and investment goals.

To maximize bond investing, it is advisable to seek assistance from a financial advisor. They can help you select the appropriate bonds based on your financial situation and objectives. 

Read more: Investment Strategies for a Forecasted Recession

Private Equity

Instead of investing in publicly traded stocks, private equity allows individuals to invest in privately held companies and diversify their portfolios with more uncorrelated investments. The private markets can offer considerably more investment options because the majority of companies are privately held and do not trade on market exchanges. Not every investor may qualify for these types of investments, so we recommend speaking with your financial advisor to determine if these are right for you.

It’s essential to consider the risks associated with private capital. One key risk is the illiquid nature of these investments. Unlike publicly traded securities that can be easily bought or sold, private equity investments often have longer lock-up periods. This restriction on liquidity means that individuals may not have immediate access to their invested capital.

Private Debt

Private debt offers another avenue for investors looking to tap the private capital markets. This asset class can play an important role in further diversifying your portfolio. Private debt involves lending money to non-public entities or companies in exchange for interest payments. Where public lending markets may become much tighter for borrowers, private lenders can step in to fill the gap. This approach allows investors access to unique opportunities that are not available in the traditional public debt space. Similar to private equity, not every investor can qualify for these types of investments. 

Investing in private debt offers several advantages for wealth protection. First, it provides the potential for higher yields compared to traditional public debt or individual bonds. Private debt investments often entail higher interest rates, offering investors the opportunity to earn attractive returns. Adding private debt to portfolios can help diversify between both public and private markets. Additionally, it allows individuals to earn a steady income.

Risks of private debt can include the potential for default by borrowers and the lack of liquidity compared to publicly traded bonds. Thorough due diligence and a comprehensive understanding of the investments are crucial for mitigating potential risks.

Put Options

One strategy that offers attractive downside protection is investing in put options. Put options give investors the choice to sell an asset at a set price during a specific time period. By purchasing put options, investors can protect their existing investments against potential market downturns or price declines.

Benefits of Using Put Options:

1. Downside Protection: Put options provide downside protection, acting as “insurance” for your investments. They protect you by allowing you to sell your assets at a set price if the market goes down below the target. This prevents you from losing too much money.

2. Cost-Effective Hedging: Put options can be acquired at relatively reasonable prices, especially during times of market stability. By purchasing these options, you can build in downside protection without incurring the same level of costs associated with selling highly appreciated investments and then trying to time when to repurchase the security. 

3. Flexibility and Control: Put options offer investors the flexibility to customize their protection strategy according to their specific needs and risk tolerance. You can choose the strike price and expiration date that align with your financial goals.

Risks to Consider:

1. Time Constraints: Put options have a time limit. If the market doesn’t move as expected within that time, the options become worthless. 

2. Volatility Factors: Large price swings and unexpected changes in market volatility can impact the performance and cost of put options. This volatility risk should be weighed as it can affect the effectiveness of your hedging strategy.

3. Opportunity Cost: Purchasing put options requires an upfront cost in the form of option premiums. This cost protects against losses, but the options expire and become worthless if the market stays stable or goes up. It could also take money away from other possible investments.

What Tax Strategies Can Help Protect Wealth?

Individual Municipal Bonds

One of the primary benefits of individual municipal bonds is the tax advantages they offer. These bonds are issued by state and local governments, and the interest income they generate is generally exempt from federal taxes. If you buy bonds from your state, you might not have to pay state and local taxes. This can provide significant tax savings, especially for individuals in higher tax brackets.

Tax Loss Harvesting

By taking advantage of capital losses on investments, individuals can strategically offset other capital gains and reduce their overall tax burden. After calculating your capital gains and losses, you can sell investments to balance out your gains and lower your tax responsibility.

It’s important to note that tax laws and regulations are complex and can change over time. Consulting with your financial advisor or tax professional is crucial to ensure that tax-loss harvesting is implemented correctly and in compliance with current regulations. 

How Does Estate Planning Help Protect Family Wealth?

Estate planning ensures a smooth transfer of assets from one generation to the next. When it comes to high-net-worth individuals, the stakes are even higher. Without proper planning, the wealth accumulated over a lifetime can be eroded by taxes and other financial obligations.

One key consideration for successful individuals is the potential tax implications associated with their estate. Estate taxes, also known as inheritance taxes, can significantly diminish the value of an estate if not strategically managed.

Working with an experienced estate planning attorney and financial advisor is crucial for individuals and families seeking to protect their family wealth. It can help reduce taxes, keep asset distribution private, support beneficiaries and safeguard family wealth from creditors.

What Is a Family Trust?

In addition to providing asset management and protection, a family trust can also serve as an effective estate planning tool.

A family trust helps manage and distribute assets while the person who created it is alive as well as after they pass away. By establishing a trust, the grantor can maintain control over their assets while also protecting them from potential risks and uncertainties.

One of the main advantages of a family trust is its flexibility. A trust is distinct from a will because it allows for asset management in the event that the creator becomes incapacitated. This can provide peace of mind and ensure that the grantor’s financial affairs are taken care of in a seamless manner.

There are different types of family trusts to consider, including revocable trusts and irrevocable trusts. A revocable trust allows the grantor to retain control over the assets and make changes to the trust during their lifetime. On the other hand, an irrevocable trust, once established, cannot be changed or revoked without the consent of the beneficiaries.

Creating a family trust requires careful consideration and guidance from an estate planning attorney and financial advisor. They can provide advice on setting up the trust, selecting the trustee and aligning the trust with the grantor’s financial goals.

Ensure Your Portfolio Is Aligned to Your Risk Tolerance

When it comes to safeguarding family wealth, it’s also important to make sure you’re personally comfortable with your level of investment risk. We want to make sure you can sleep at night. Your risk tolerance can change over time, so it is important to regularly reassess it and adjust your investment strategy accordingly. 

Talk to our Private Wealth team today to ensure your investment portfolio is structured in a way that reflects your risk tolerance and helps protect your wealth for the future.

Investment Advisory Services offered through Private Wealth Asset Management, 411 6th Avenue SE, Suite 360, Cedar Rapids, IA 52401. 888-611-7926. This report is being provided for informational purposes only and should not be used as the sole basis for financial decisions, nor be construed as investment advice designed to meet the particular needs of an individual’s situation. Contact your investment advisor to discuss your specific goals and objectives.


Expert insights delivered straight to your inbox.

We write to our friends and family every few weeks or so with big news, big ideas, and big updates. Sign up now and get the inside track.

wealth planning
hanging with grandson