There is no denying that the market is seeing an all-time low stage where making profits seems like an extinct result of the yesteryears. But instead of panicking and scampering around looking for solutions, it is better to calmly think of a way of securing your funds before it is too late. When there is a personal emergency at home, we try and think of solutions to combat and solve the problem. In the same manner, problems of the market need to be dealt with in a calm and composed manner, rather than in a gullible fashion. Yes, it is finally time for you to learn a few disaster management skills that will protect your financial interests in such turbulent market times. There can never be an issue with resolving to invest it is only the avenues you opt for that determines the success rate of your prudent decision. Opting for personal loans, home loans etc can never be termed as wise decisions whereas patient and prudent decision making in terms of investments is what is always considered to be a better choice
When talking in business terms, you might have often come across the term “war chest”. A war chest does not contain any war or battle treasures or possessions. It simply refers to money that is set aside to meet the unpredictability of a business environment. The amount of money in a war chest must be equal to at least six months of expenditure of the business. This money may also come in handy at a time when you choose to expand your business, or when other difficulties crop up. The amount of expenditure must include expenses like water and electricity charges, rent, food expenses, Equated Monthly Installments on the enterprise’s name, debt payments to be made by the business and all other miscellaneous expenses that are unavoidable during the course of business. The main purpose behind maintaining and managing these funds is that it will essentially help you overcome the impending crisis, until you come to a safe shore. Time must be dedicated towards building your war chest. For instance, you may choose to set aside funds on a monthly or quarterly basis towards your war chest. Its objective is to help you tide over any financial mayday in your business. You however, need to maintain a liquidity surplus of at least two months in advance to carry out this process in a smooth manner.
Analyze and thoroughly review your spending pattern in regular intervals. Avoid big ticket purchases when the market is in shaky or turbulent times. Cut down and limit your expenditure as much as you can, as this will especially come in handy when the market experiences a downturn. Also, try and maintain as much liquidity in your investments as possible. Financial observers believe that there is no better way to maintain liquidity than with the help of short-term funds, which are also better known as liquidity funds. You can invest in these deposits for a minimal period of 90 days, and if you choose, you can roll over the investments for another period of the same duration. Try and opt for an individual insurance cover that has lifelong validity. As long as you don’t skip or default on any of your payments, and maintain consistency and regularity in payments, the policy will not lapse or come to an end. Such policies will especially come in handy when an individual takes a financial beating, either by way of market turbulence or loss of job. Either way, it is best to save some money in insurance as it comes in handy at the time you need it the most.
Thus, the best answer investors can offer the market as it witnesses is downfall is quite simple. They shouldn’t panic themselves blind and withdraw all investments without analyzing and contemplating if such a step is required or not. Invest in time-tested investments as they have braved the extremities of the market for quite some time now.