- Begin by protecting what you most need and value:
- Define your “ruin.”
- Identify risk of ruin factors.
- Utilize reasonable risk containment measures.
- Through appropriate risk transfer planning, reduce risk of ruin to as near 0 as possible.
- Going forward, when making any decision regarding product or strategy:
- Determine potential and likelihood for loss.
- Determine upside potential and likelihood.
- Determine the expected value of your decision.
- Confirm the decision doesn’t affect your risk of ruin calculation.
- Focus on the real rate of return.
- Integrate assets to maximize both upside potential and downside protections as well as (if possible) reducing the cost of your risk of ruin protection, always with a focus on real rates of return.
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