Milestone 7: Protect wealth

The three quiet threats to every nest egg

Building wealth is only half the job. Keeping it is the other half. Most people don't lose money in crashes. They lose it in three quiet threats they were never taught to watch for.

Threat one is taxes. Threat two is losses. Threat three is inflation. Each can quietly cut a nest egg in half over decades, and they stack.

Less exciting than building wealth, but the math is just as real. Protecting $1 is the same as earning $1.

Key points

• Taxes: the million dollar mistake. Doubling a dollar 20 times at 0% tax gets you to $1,048,576. At 30% tax each double? About $40,000. Where you put money decides.
• Losses: the math isn't symmetric. Lose 50% and you need a 100% gain just to break even. Diversification across industries and risk levels avoids drawdowns you can't recover from.
• Inflation: the silent thief. At 2.8% average inflation, prices double every 25 years. If you think you need $1M for retirement in 25 years, you need close to $2M for the same buying power.
• Create a will. Not sexy. Not optional. Without one, the state decides what happens to your assets and kids. Basic will takes an afternoon.

The discipline test

The hardest part of protecting wealth is doing nothing during a downturn. Markets drop 30%, your instinct is to sell. That instinct is wrong. Automatic contributions, ignore noise, check quarterly.