A common subject in these days since the original sub-prime crisis begun, especially when the crises turned in a world wide one, one which holds until this days.
In the following series of articles I want to bring You, my dear reader, deeper in the subject of Protection of Your assets and values. The information on which this blog will be based on is my own experience of more than ten years in financial services and in gathering knowledge in investing money.
In the following series of articles I want to bring You, my dear reader, deeper in the subject of Protection of Your assets and values. The information on which this blog will be based on is my own experience of more than ten years in financial services and in gathering knowledge in investing money.
Definition of protection
We will start this series with the explanation of what protection is and why we like it so much.From where comes our need to be protected, if possible 24 hours, seven days a week. There are things which we would like to have, such as materials for example a new car or a greater vacation then our neighbor. And there are needs which our body, like water and food, and our soul, like to be loved or safeness, require to have.
Our need for safeness and protection is given to us by nature. First important notice is that safeness is one of our basic needs. To feel save we need protection. Protection we want to have in our car in form of an airbag, technical supports or in financial matters like life insurances.
Economy teaches us in university different ways to handle risks. They can be avoided, reduced or protected. Happily we have an industry, the insurer or in some cases the government, which tell us how to handle risks. Mostly in the way to take an insurances to Cover the Risk. But do we need to cover each possible risk?
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I think we should remember which possibilities of handling risks we have, as said we can avoid, reduce or cover. The best example are the varieties we observe in nature. How do animals or plants handle risks?
They organize their selves in groups, they teach their young once what is good and what is dangerous and as hard as it sounds nature selects between skills and advantages which are helpful and those which are useless. Based on a simple example, like driving a car, I want to show You the possibilities. Humans are not made to drive, but anyway it gives us a luxury which we don´t want to miss. So we could avoid to walk or use the public transport instead. Otherwise, driving slower or in speed limits to reduce the risk. Also a great opportunity would be to visit regularly driving courses. Or we simply cover possible outcomes of the risk in form of an insurance.
Most common will be the car insurance. As a positive outcome, as more cars are covered as lower the price for the whole community.
Other example would be risks of a marriage, divorce. Still a risk which a community of people would like to cover, but no insurer wants to offer protection. Same question like before, the risk can be avoided. This possibility would have maybe a higher negative impact then otherwise. Take the risk in full, a negative impact could be greater in some cases then in others. For example, in the case of a business owner. Or protection can be found in a marriage contract.
They organize their selves in groups, they teach their young once what is good and what is dangerous and as hard as it sounds nature selects between skills and advantages which are helpful and those which are useless. Based on a simple example, like driving a car, I want to show You the possibilities. Humans are not made to drive, but anyway it gives us a luxury which we don´t want to miss. So we could avoid to walk or use the public transport instead. Otherwise, driving slower or in speed limits to reduce the risk. Also a great opportunity would be to visit regularly driving courses. Or we simply cover possible outcomes of the risk in form of an insurance.
Most common will be the car insurance. As a positive outcome, as more cars are covered as lower the price for the whole community.
Other example would be risks of a marriage, divorce. Still a risk which a community of people would like to cover, but no insurer wants to offer protection. Same question like before, the risk can be avoided. This possibility would have maybe a higher negative impact then otherwise. Take the risk in full, a negative impact could be greater in some cases then in others. For example, in the case of a business owner. Or protection can be found in a marriage contract.
Summary
All in all, protection is grounded in our genetics as a basic requirement for our species. But there are plenty of possibilities to handle a specific risk and not every risk must be covered like the commercial keeps telling. Sometimes it will be the simple things which have a great resolution or simply doing nothing would be also an option.
Take a look on part two, Diversifikation
Take a look on part two, Diversifikation
