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Financial investment is all about the allocation of money with the aim to gain a positive return in the future. In a simpler context, investment is all about owning an asset with the objective of generating income from the appreciating value of the asset over time.
Learning how to invest money is difficult, which, once mastered, can lead you to relish the pure bliss of financial freedom. However, as the ongoing pandemic ignited a major recession worldwide, even the pros of the investment realm are struggling immensely.
This financial investment guide is particularly targeted to help you recession-proof your investment for the next downturn, all while protecting your current investment in this pandemic, turning the tables.
How Do You Survive A Financial Crisis?
Only a recession doesn’t need to produce financial crises. It could result from being hit with a significant adverse life event that can influence your finances; for instance, a job loss, an illness, a car accident—or a pandemic—can leave you insomniac. Therefore, it is always good to prepare beforehand to battle financial crises. Below are the top 3 tips to help you survive financial problems:
1. Stay Frugal
The fool-proof method to battle financial crises is to live below your means and utilize what you have; this is what you call frugality. Opting for a frugal lifestyle is indeed a wise decision you can make while experiencing financial strain.
During financial crises, focus on being money-smart. While buying things, your choice must be longevity, not the here and now, and not on how big something is or how flashy it looks. It’s also the right time to awaken the chef hidden within you and begin home cooking rather than dining out and squandering money.
2. Focus on Your Peace
Humans are greedy beings who are stuck in the vicious cycle of desiring more and more. Let’s admit, the grass will always be greener on the other side. The truth is that it’s all faux!
Try your utmost to stay positive and give yourself a pep talk because it is only you who can provide yourself moral support. Most importantly, do not lose hope; after all, financial crises are temporary trouble; you will make out of this mess, triumphant, sooner or later.
3. Distinguish between Necessity and Want
A good rule of thumb to be mindful of is that if you don’t need it, don’t buy it. Focus on stretching the family budget or pay for necessary things.
The ‘want’ to buy new shoes or go for a fine-dining restaurant will make your pocket tighter, in hindsight. Here’s precisely where the practice of ‘delayed gratification’ comes into the picture.
Hold your nerves and avoid those shopping sprees or gratifying your wants that can further ruin your financial stance. Simply put, do not waste money.
How to Properly Invest Money
Investing money during financial crises requires a structured plan to help you remain afloat at the least, with high potential to grow. The following advice can help you can learn how to invest money during financial crises properly:
1. Evaluate Your Expertise
It is necessary to acknowledge your forte. Indulge in self-reflection and figure out what you are truly good at. To formulate an investment strategy during financial crises, you should always consider your expertise.
This is necessary so that you do not have to exert yourself extraordinarily in learning before investment. During tough times, your goal must be to protect yourself financially rather than spend hours on research and try to master something you are doing for the first time.
When you begin investing in alignment with your expertise, it pays off, and this must be your priority during times of crisis.
2. Get Tight With the Deadlines.
First and foremost, be very specific about the disposable income you have to invest during a financial crisis. After deciding your monetary limit, set a deadline to invest and stick with the plan.
Ideally, prioritize to invest within a month, as your zeal to invest could wear off with time. It is better not to let that happen and invest right away in order to gain financial security. No one wants to stay in crises for long, and only a carefully planned investment strategy can help you get out of it.
3. Focus on Action
While you have made your mind to invest during a financially trying time, the best investment strategy that can help you win is to invest today and not wait for tomorrow. Even if it just a small amount of money, invest right away before it’s too late. Remember that when it’s a financial crisis, your action is all that matters. Even if you are resolute to invest, it is futile until you have made a solid move – an action.
The golden tip is that do not dwell on your decision. Let your intuition take the lead this time, spot a good investment opportunity, and grab it, immediately.
4. Envision a Long Term Goal
During financial crises, even short-term survival seems like an uphill battle. But, do not commit the mistake to let the present circumstance define your future.
Think of long-term goals, and opt for investment opportunities that will pay off to safeguard you against future financial crises.
If you are facing financial constraints now, know that you can invest and make your future better. Dream big and think about tomorrow – do not miss investment opportunities.
“Out of adversity comes opportunity” – Benjamin Franklin.
The Bottom Line
Learning the tricks of monetary investment is no big feat. All you need is to educate yourself and keep tabs on the latest happenings of the investment world. By enhancing your knowledge base, you can make wiser decisions about your investment, saving yourself from losing money earned by pouring your blood, sweat, and tears.
This financial investment guide allows you to seek guidance and weather the storm brought by the financial crises courageously.
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1” – Warren Buffett.