How has the financial and investing landscape changed in the past few years? For starters, there’s an ongoing recession and record high inflation as of late 2022, and the ongoing Ukraine-Russia war and global supply chain situation are far from over. That means consumers need to be on the lookout for wise financial maneuvers that have the potential to protect and possibly grow capital during these challenging times. The modern era calls for a fresh approach and a new way of looking at things. The old guidelines don’t always work.
Nowadays, people need to be more informed than ever, which begins by knowing whether the securities markets are in a bearish or bullish cycle at any given time. Other indispensable tactics for personal financial survival include exploring the real estate niche, building more than one income stream, knowing your precise net worth, investing in outpacing inflation, mapping a route to home ownership, reining in monthly expenses, improving credit scores, and acquiring the right kinds of insurance coverage.
Know the Market Trend
Investing in a volatile economic environment can be tricky at best. That’s why it’s crucial to stay informed about the state of the securities markets. At a minimum, know whether the current trend is bearish or bullish. In addition, try to keep an eye on which sectors are doing well and which aren’t, what the inflation rate is, and where the prime rate of interest stands. Knowledge is power, and knowing the main parameters of the overall marketplace can help people make more informed decisions about home buying, retirement planning, and much more.
Work on Credit Scores
Never assume your credit scores are accurate or high enough. Reporting agencies make errors that creep into personal reports and can ruin an otherwise excellent rating. Plus, those who work on improving credit scores regularly are often surprised that their numerical scores change pretty often. What can you do to boost the numbers upward? First, correct any errors immediately. Send the written communication to the bureau that made the error and document the reasons you have for saying that a particular listing is in error. Next, keep credit balances as low as possible to avoid utilizing available credit, pay all bills on time to stay away from late payments hitting your account after thirty days, and maintain a savings account with an emergency fund of a few months’ reserves at a major bank or local credit union.
Learn About REITs (Real Estate Investment Trusts)
Investing in real estate via REIT companies is one of the simplest ways to get a foot into the door of a potentially lucrative asset class. Unlike many other investment vehicles, REITs can offer holders the chance to earn regular income from dividends over a very long period. Those who want to diversify their portfolios, watch their capital holdings appreciate, and not worry about market volatility tend to prefer REITs. However, it’s imperative to realize that REITs vary widely in quality, so a decent amount of research is involved in choosing the right ones. Prospective buyers should ask several questions as they search for the most suitable assets to add to their portfolios.
All potential REIT owners need to check out company financial reports, dividend payout histories, average dividend yield rates, the kinds of properties within a given trust, the quality of the management team, the location of the properties, and other pertinent factors. Step one is to review an informative guide that lists the year’s best performers within the REIT sector.
Calculate Your Net Worth
Knowing your net worth is crucial, not just an exciting exercise in financial math. Lenders use the number to determine loan interest rates, terms, and other essential parts of agreements that you may be eligible for. To measure your net worth, make a detailed list of all your assets. Then, subtract all your outstanding debt. The resulting figure is net worth. Don’t forget to include home equity, student loans, back taxes, credit card balances, and vehicle values in the overall calculation.
Build Multiple Income Streams
After securing a full-time job, consider adding a second income stream as a part-time position, small investment account, or a business you start and operate yourself. A part-time job is the most reliable second income source for younger adults. Be careful to avoid adding too many hours to your work schedule each week, or there’s a risk of suffering from burnout. Instead, explore the many micro jobs available online. A few of the most popular ones that offer good pay and fully flexible hours include tutoring, website testing, and freelance writing. Most micros call for modest skill levels, so choose one that suits your interests, abilities, and time restraints.
Aim to Match or Beat Inflation
Whatever you invest in, or wherever you decide to park capital for more than a year, keep the inflation rate in mind. There’s no sense, for instance, in buying a certificate of deposit that returns 3% when inflation is running in the double digits, as it is in late 2022. When you find it particularly challenging to match the inflation rate, consider purchasing hard assets that have the potential to keep up, like real estate or precious metals.
Get Personal Spending Under Control
With inflation, recession, and unstable employment wreaking havoc with the current economy, it’s critical to minimize personal monthly expenses. Without going to extremes, put every spending category under the microscope to eliminate unnecessary leaks in the budget. Prime candidates for the chopping block include fast food, coffee shop purchases, convenience store spending, and gas. Designate one or more weekly days to use public transportation and check out wholesale clubs to save on groceries.
Don’t Ignore the Need for Insurance
Speak with a trusted, experienced insurance agent to ensure you have enough life, health, auto, home, and other coverage. People typically don’t have enough life insurance but tend to have too much coverage on older cars. Do a complete policy review and get all the amounts to their proper levels.