Sunday, September 27, 2020

Market Volatility: How to Manage Your Finances?

When the market dives, it seems like a one-targeted plan to protect your assets. There are other necessary financial steps that you need to make to secure your entire portfolio, properties, and finances, however. Dealing with a downturn on the market is more accessible, but how do you manage volatile times successfully when it comes […]

Market-volatility

When the market dives, it seems like a one-targeted plan to protect your assets. There are other necessary financial steps that you need to make to secure your entire portfolio, properties, and finances, however. Dealing with a downturn on the market is more accessible, but how do you manage volatile times successfully when it comes to your overall well being?

What are volatile times? Global crises, unstable employment / increasing unemployment, crashing stock markets, and frozen credit markets may be involved. What can you do to get your finances ready? Let’s find out in this article.

What Are the Steps to Manage Your Finances in a Volatile Market?

  1. Remain in your current job: The doctrine of “last hired / first fired” usually kicks high in volatile times. Volatile times are generally tough to change a career in practical terms. From a financial survival point of view, the best strategy is to hold on to your current job for as long as possible.
  2. Develop a backup plan for you: If the volatile times last long enough, your income will be hit. Recognize this, keep your resume up to date, refresh diplomatic contacts regularly, and continuously improve your skillset. You may need to make a significant move in a very competitive labor market in a short time.
  3. Start your side business: If you have skills that lend themselves well to direct sales to companies or the general public, you might consider putting them to work through a side business venture. It will provide you with extra income, but it may represent the core of your backup plan if your current income situation fails.
  4. Strengthen your network: Many people only do this when they’re searching for a new job. But the risk of volatile times should make this a continuous effort. You’re supposed to reach out to anyone in your industry, and even people around the periphery. You never know where the next chance comes from — and you can’t do it unless you keep your feelings out.
  5. Avoid wholesale changes to your investment allocation: Likely, the asset allocation plan you have planned for will also serve you well in a volatile environment. You probably don’t need to take an ax to your current portfolio and rearrange the entire allocation.
  6. Reduce, but don’t eliminate, your exposure to equity:Don’t let the bull market exaggerate your equity allocation. To be prepared for volatile markets, consider investing in high dividend stocks. The dividends provide a kind of a cushion. In case the price of the underlying stock fall, you’re still earning steady dividend income.
  7. Reduce your expectations:You’re making $65,000 this year, and you’re expecting to make $100,000 next year — but that doesn’t happen. So be it now. Another year at $65,000 isn’t a bad thing, and there’s always year after year to make a big move forward. It’s going to be OK!
  8. Develop your patience:Good things take longer to happen in volatile times. Make peace with that kind of concept. Dreams and expectations are crushed by volatility, so you need to develop a longer timeframe. That’s going to require patience. If you’ve never had a lot of patience, it’s something worth working on.
  9. Take a long-term perspective:Life never moves in straight lines, whether up or down, even though it seems to be the case in good times. But when times are turbulent, the short run is rarely predictable or settled. You’re going to have to embrace the long-term perspective in virtually every area of your finances. You may not be retired in 10 years, but you may be able to retire in 15. You might not be able to get out of debt next year, so you’re going to have to be ready to take three years or five. This long-term perspective is a critical point of view in volatile times. It’s going to help you get through bumps and bruises that are sure to hit in the near term.
  10. Emphasize and build up liquidity:Cash is the king in unstable times. Of course, you might miss an opportunity here and there, but the leading thing cash does — no other asset can — is to preserve options, and options are one of the best things to have in times of volatility. You can use cash and cash equivalents to provide a cushion against job losses, pay for contingencies, or have the ability to invest when the financial universe has clear signs of the settlement.

Finally, A lot of steps are needed to be prepared for volatile times in the economy. But if you can take as many of your circumstances as you can, you’ll be better prepared for the ups and downs to come.

Have you thought about what you’re going to do if something like the financial meltdown comes back? Have you considered any strategies you’re going to implement? If not yet, you can get in touch with our financial experts at Wealthface.

 

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Wealthface is a one-stop online investment company that services all kinds of investors. It provides affordable high-quality investment products and services, tailored to each type of investor, and delivered at a low cost in a fully transparent manner. The company plays the role of a Fiduciary investment advisor, which means it always puts the client’s interest first.

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