Asset protection: When should an individual seriously consider shielding their assets?
"If your meaning of ""asset protection"" is buying gold and canned food in the name of a Nevada LLC because some radio guy said so, bad idea. For a person, if you have assets, buy appropriate liability limits with your homeowner/renter insurance policy or purchase an ""umbrella"" liability policy. This type of insurance is cheap. If you don't have assets, it may not be worth the cost of insuring yourself beyond the default limits on your renter's or homeowner's policy. If you have a business, you need to talk to your insurance agent about what coverage is appropriate for the business as a whole vs. you personally. You also need to talk to your attorney about how to conduct yourself so that your business interests are separated from your personal interests."
"Well.... If you have alllll your money invested, and then there's a financial crisis, and there's a personal crisis at the same time (e.g. you lose your job) then you're in big trouble. You might not have enough money to cover your bills while you find a new job. You could lose your house, ruin your credit, or something icky like that.  Think 2008. Even if there's not a financial crisis, if the money is in a tax-sheltered retirement account then withdrawing it will incur ugly penalities. Now, after you've got an emergency fund established, things are different. If you could probably ride out six to twelve months with your general-purpose savings, then with the money you are investing for the long term (retirement) there's no reason you shouldn't invest 100% of the money in stocks. The difference is that you're not going to come back for that money in 6 months, you're going to come back for it in 40 years. As for retirement savings over the long term, though, I don't think it's a good idea to think of your money in those terms. If you ever lose 100% of your money on the stock market while you've invested in diversified instruments like S&P500 index funds, you're probably screwed one way or another because that represents the core industrial base of the US economy, and you'll have better things to worry about, like looking for a used shotgun. Myself, I prefer to give the suggestion ""don't invest any money in stocks if you're going to need to take it out in the next 5 years or so"" because you generally shouldn't be worried about a 100% loss of all the money in stocks your retirement accounts nearly so much as you should be worried about weathering large, medium-term setbacks, like the dot-com bubble crash and the 2008 financial crisis. I save the ""don't invest money unless you can afford to lose it all"" advice for highly speculative instruments like gold futures or social-media IPOs. Remember also that while you might lose a lot of your money on the stock market, your savings accounts and bonds will earn you pathetic amounts by comparison, which you will slowly lose to inflation. If you've had your money invested for decades then even during a crash you may still be coming out ahead relative to bonds." First off, I'm very sorry for your loss.  Depending on when the money comes in I would park it and give it some time.  After that, one of the best investments is paying off debt.  Right now your net worth is less than 30K and that is really not even accessible until retirement.  If the money is there to pay off the house I would do that.  If there isn't enough to pay off the house then I would pay off the automobile and put all or a sizable portion of the remainder into the house.  Now you have very little risk in your life and most likely much more monthly income to invest in 401K, IRAs, college funds or any other investment. Life insurance is mostly to replace your income if there are people counting on that income (spouse, kids, etc).  Normally this would be invested to hopefully replace that income with the growth of the money.  In your case it doesn't sound like you were relying on your father's income, so this can go to clean up current debt. Finally, depending on your relationship, what kind of person your father was and how he was with financials, what do you think he would want you to do with it? At 22yo, unless you have a terminal illness, you have many years to earn and save a lot more that you will have in your 401k right now (unless you have already been extremely lucky in the market with your 401k investments). This means that even if you lost everything in your 401k right now, it probably wouldn't hurt you that much over the long term. The net present value of all your future savings should far exceed the net present value of your 401k, if you plan to earn and save responsibly. So take as much risk as you want with it right now. There is no real benefit to playing safe with investments at your age. If you were asking me how much risk should you be taking with a $10m inheritance and no income or much prospects of an income, then I'd be giving you a very different answer. Pay off the debt first.  Life circumstances change without notice, and starting any stage of life with a debt puts you at a disadvantage.  Luckily, your debt is small.  Please also consider accumulating a 6 month emergency fund before making investments. This will further protect you when life hands you a curveball. Since the question asked for options, rather than advice, I’ll offer a few.  And you can ignore the gratuitous advice that may sneak in. There are countries that will happily give you citizenship for a fee.  And others where an investment of far less than your million will get you well on your way.  Having citizenship and a passport from another country can be handy if your current one is or becomes unpopular or unstable. From data at numbeo.com, I estimate that my lifestyle would cost me $3300 (US) in Geneva, Switzerland, and that everywhere else on the planet would be less.  I haven’t been to Geneva, but I have spent only $2500 (average) per month in eleven countries over three years, and could have been comfortable on far less.  $2500/month will go through 1.2 million in only forty years, but if you use it to generate income, and are less wasteful than me, ... With the first few dollars you get, you might take steps to hedge the possibility of not actually getting it all.  Appeals can take a long time, and if the defendant runs out of money or figures out how to hide, the size of the judgment is irrelevant. Believe strongly enough in something to donate money for/to it? I’ll leave the investment options to others. It is not likely the YA would die in 10 years. Hence the investment the parents make in policy premiums would lose all of its money. Repeat: lose all money.  On average, you'll slightly lose with insurance. It's there for peace of mind and to mitigate a catastrophe. It's not an investment. Of course, if the YA is likely to die suddenly, that might change things. But concealing medical information would be grounds for denying the policy claim. Whatever you choose for a remedy (my first impulse is to suggest bankruptcy) you should protect your retirement plans.  These are immune from most collection actions, the exception being govt debts (e.g. taxes) and student loans.  The sad part is that the student loans won't go away except by paying them off.  Miss one payment and it will hound you for 10 years.  Bankruptcy will stop you from getting a home loan for only two years.  Unless you have the discipline to live like a monk for a decade it sounds like you're headed for a train wreck.  The kids will have to cut back to junior college or some other method of reducing costs and as hard as it sounds, don't cosign for any more student loans. Kids are more resilient than you think and they'll probably come up with their own solutions like scholarships, work study and off campus jobs.  I hate to keep beating the bankruptcy horse but at least that way you could still keep your house and car.  Otherwise you risk losing either or both from missed payments.  I actually hope that you can avoid bankruptcy so I suggest first you talk to a financial adviser or bankruptcy attorney to see if this is in fact right for you. But if it's just the shame of the scarlet letter B then consider that pride doesn't keep a roof over your head or food in your belly. "is it worth it? That is for you to judge. The risks are having it blowup in your face, and you having to pay a penalty, or go to jail. The issue is how you keep it secret, and who you keep it secret from. If you have money in a secret account and keep it hidden even though you: You are taking a big risk. If the knowledge of the contents of the secret stash would cause a judge or government agency to make a different decision, you could face penalties ranging from monetary to jail time. The government could also decide that they need to determine the source of the funds. They may want to know if the money was ""earned"" through illegal means. They will want to determine if the funds should haven taxed not just on the interest but if the original income tax was ever collected.  If the amounts are large enough the taxing authority  and police will have a lot of fun pulling apart your entire financial history. Oh and the lawyers you pay to keep you out of jail will also have their fun. why do some people do it? They are greedy; or paranoid; or they don't trust others; or they are criminals." "Making these difficult portfolio decisions for you is the point of Target-Date Retirement Funds.  You pick a date at which you're going to start needing to withdraw the money, and the company managing the fund slowly turns down the aggressiveness of the fund as the target date approaches.  Typically you would pick the target date to be around, say, your 65th birthday.  Many mutual fund companies offer a variety of funds to suit your needs. Your desire to never ""have to recover"" indicates that you have not yet done quite enough reading on the subject of investing.  (Or possibly that your sources have been misleading you.)  A basic understanding of investing includes the knowledge that markets go up and down, and that no portfolio will always go up.  Some ""recovery"" will always be necessary; having a less aggressive portfolio will never shield you completely from losing money, it just makes loss less likely. The important thing is to only invest money that you can afford to lose in the short-term (with the understanding that you'll make it back in the long term).  Money that you'll need in the short-term should be kept in the absolute safest investment vehicles, such as a savings account, a money market account, short-term certificates of deposit, or short-term US government bonds." Yes.  If you're still 20 years off from retirement, it wouldn't make sense to liquidate everything; it'd be an attempt to time the market. If you're *very* worried and retirement is soon, then it'd be something to consider (albeit bonds would make more sense at that point). (Disclosure - I am a real estate agent, involved with houses to buy/sell, but much activity in rentals) I got a call from a man and his wife looking for an apartment. He introduced itself, described what they were looking for, and then suggested I google his name. He said I'd find that a few weeks back, his house burned to the ground and he had no insurance. He didn't have enough savings to rebuild, and besides needing an apartment, had a building lot to sell.  Insurance against theft may not be at the top of your list. Don't keep any cash, and keep your possessions to a minimum. But a house needs insurance for a bank to give you a mortgage. Once paid off, you have no legal obligation, but are playing a dangerous game. You are right, it's an odds game. If the cost of insurance is .5% the house value and the chance of it burning down is 1 in 300 (I made this up) you are simply betting it won't be yours that burns down.  Given that for most people, a paid off house is their largest asset, more value that all other savings combined, it's a risk most would prefer not to take.  Life insurance is a different matter. A person with no dependents has no need for insurance. For those who are married (or have a loved one), or for parents, insurance is intended to help survivors bridge the gap for that lost income. The 10-20 times income value for insurance is just a recommendation, whose need fades away as one approaches independence. I don't believe in insurance as an investment vehicle, so this answer is talking strictly term. There is not necessarily a need to prevent what you describe - 'turning insurance on before high risk situations'. They just need to calculate the premiums accordingly. For example, if an insurance needs to take 50$/year for insuring your house against flood, and a flood happens in average every 10 years, if you just insure the two weeks in the ten years where heavy rain is predicted, you might pay 500$ for the two weeks. The total is the same for the insurance - they get 500$, and you get insurance for the dangerous period. In the contrary; if a flooding (unexpectedly) happens outside your two weeks, they are out. From the home owners view, 500$ for two weeks when heavy rains and floods are expected, and nothing otherwise sounds pretty good, compared to 50$ every year. It is the same of course, but psychology works that way. "You don't mention what kind of insurance you're talking about, but I'll just address one angle on the question. For some kinds of insurance, such as health insurance (in the US), auto insurance, and homeowner's insurance, you may be insuring against an event that you would not be able to pay for without the insurance.  For instance, if you are at fault in a car accident and injure someone, they could sue you for $100,000.  A lot of people don't have $100,000.  So it's not even a matter of ""I'll take the risk of having to pay it when the time comes""; if the time comes, you could lose virtually everything you own and still have to pay more from future earnings.  You're not just paying $X to offset a potential loss of $Y; you're paying $X to offset a potential derailment of your entire life.  It is plausible that you could assign a reasonable monetary value to that potential ""cost"" that would mean you actually come out ahead in the insurance equation. It is with smaller expenses (such as insuring a new cellphone against breakage) that insurance becomes harder to justify.  When the potential nonfinancial ""collateral damage"" of a bad event are less, you must justify the insurance expenses on the financial consequences only, which, as you say, is often difficult." There is no such animal. If you are looking to give up FDIC protection, investing in a short-term, high quality bond fund or a tax-free bond fund with short durations is a good way to balance safety vs. return. Make sure you buy funds -- buying individual bonds isn't appropriate for folks without a high net worth. Another option is savings bonds, but the yields on these is awful today. "The conclusion that ""it's bad to have 0% utilization"" from the data you linked is misleading.  When people have zero history, they also have zero utilization.  The fact that generally people with zero utilization are credit virgins is what drives that average score.  Obviously, people with zero, or limited, history will have significantly lower credit scores than folks with some utilization and a lot of history. In response to the couple comments regarding the dip on attaining 0% utilization.  The data shows a 67 point drop in average score from 0% to 1%-10%.  The stark deviation in average score between those two groups is not the result of a couple point change because of zero utilization."