Investing: A Lesson In Operating In Uncertain Times
2020 has been a testament to just how uncertain things can be. The big question is, how do you manage your finances and investments in uncertain times?
Uncertainty & Your Finances
No matter how chaotic and uncertain life gets, it is important to watch your finances. Perhaps even more so when things seem less certain, and every penny can be more important than ever.
Once again, big companies going bankrupt has proven individuals can’t abdicate their financial futures to anyone else. Not even the longest running and largest corporations. You just don’t know if they are going to be around to provide that salary or benefits and retirement package or stock value when you are counting on it the most. You’ve got to take care of your own financial future.
That may mean starting your own business and diversifying your investments to achieve more control of your money and destiny.
What many struggle with is where to put their money when they don’t know what’s going to happen next. 2020 as a whole has brought a lot of uncertainty on whole new levels. Not even a clean and quick election to provide some clarity on direction for the next four years.
The lesson is that we all have to be capable of operating and investing in uncertainty. After all, certainty is really always an illusion anyway.
Investing
So, what are the money moves to make now?
In times like these, some have often run to static, non-income producing investments like gold. In late 2020, it appeared that bitcoin may be evolving as a new form of digital gold, only with far more risk and volatility.
It doesn’t matter whether the market and economy is going up, down, or sideways. In 2020, billionaires added almost $1T to their wealth in just a few months, while the number of billionaires increased. All proving that you can improve your own finances, even in the worst or most uncertain times.
The keys to this and being more certain about your finances and investments are:
- Always consistently invest, no matter what story the media is spinning this week
- Invest with risk-reward balance in your favor
- Invest for win-wins, no matter what happens.
- Be comfortable with the worst case scenario, have downside protection and multiple exit strategies
- Don’t gamble. Make calculated investments with risk adjusted returns, based on current asset value and performance
These things take discipline, and sometimes, a contrarian approach to what others are doing. By applying these principles, you can enjoy a lot more certainty in your finances, no matter what’s happening out there.
