In this article, we’re going to look at both, and I’ll show you how offense can win you games, but a great defense will win you championships.
You’ve heard the phrase as it relates to sports, but in reality it applies to so much more. In particular, it applies to wealth building in a very durable way.
Consider the boxing match: one of the first things you learn as a beginner is how to avoid being punched in the face or getting knocked out. It’s something you want to know before you ever step foot in the ring. Once you understand how to protect yourself, only then can you learn how to land a punch.
Defense is the beginning of a solid strategy — you can’t win if you’ve been knocked out. A great offense will naturally follow. When I coached rugby, I made sure my team understood the three types of systems, or strategies, that most sports are built upon.
1. The Protective System
For me, this is the first thing you should have in place. In American sports, it’s the red zone defense. For my South African and British readers, it’s like goal-aligned stances. The objective is not to allow the opponent cross the line and score. It’s your foundation, and it’s also your back up — when your other defense has done all it can do.
2. The Defensive System
There are plenty of defense strategies, but they’re all a part of the same system. You want to defend your players, defend yourself, and defend your goal/zone. These are the strategies employed throughout the game, to ensure that your team stays in a favorable position. A well-played defense can prevent the worst-case scenario, or the need to invoke the protective system.
3. The Offensive System
Lastly, we have offense, where you’re actively playing to score. Just as there are strategies for protection and defense, there are multiple ways to be on the offense. And if you never play offense, you’ll never score. But a confident offensive strategy is built on the peace of mind that a good defense provides.
With our wealth, it’s essentially the same. Our foundation must be in place first — we don’t want to be knocked out before we even start. Wealth protection takes a few forms. The following examples are your red-line defense, such as:
· Tax strategy
· Asset protection
· Estate planning
· Life insurance
· Disability insurance
· Other insurance: homeowners, auto, etc.
These are the tools that insure that nothing is going to wipe you out financially — taxes, emergencies, the inability to work, or otherwise. Because life can be unpredictable, and insurance protects you from the unforeseen. You’re protected from the worst case scenarios.
Next, you want to look at your financial defense. These are your overall strategies for wealth and risk management. If you break it down, there are different risks to your wealth — political risks, economic risks, market risks. Having strategies in place to manage these risks is essential.
Lastly, once you have your asset protection and your risk management strategies, you can confidently throw your punches. When you know you’re solid, investing for cash flow and growth will be most impactful. It’s at this point in the game where you’re ready to jump into the fray, because you know you’re backed up.
So when you’re building a durable wealth system, know how to take a punch before you try to land them. That way, your successes are that much more successful, and you’re protected in the worst case scenarios. After all, the skill of your right hook isn’t as impactful if you’ve been KO’d.
Live your Freedom, Live Your Legacy, On Your Own Terms,
M.C. Laubscher is a husband, dad, podcaster & Cashflow Specialist. He helps business owners and investors create, recover, warehouse & multiply cashflow. You can learn more about exclusive cash flow strategies in M.C.’s new video series at https://www.yourownbankingsystem.com/
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