Like most people who stepped off the Wall Street casino ride and into real estate, I did so because I wanted more control and fewer surprises.
This spring, we have seen the end of the longest bull run, the deepest drop, and the best rally in the history of the stock market. And while we are starting to open America back up, I’m planning for more market volatility in the near future as we brace for more potential closures and a steamy political race.
However, the stock market is what many investors have access to invest in, especially for retirement, and the stock market is on sale right now.
So, how can you take advantage of some of the investment deals available now and those to come in the next few months? And do so in a conservative manner?
I like to take a three-pronged approach with my financial position: foundation, growth, and momentum. Today, I will tackle foundation and growth.
Your Financial Foundation
The first step to weathering a volatile economy is having a rock-solid financial foundation to guard against uncertainty. If you were building a castle in medieval times, you would build a wall and moat around your land and dig a good foundation for your castle prior to investing in lavish artwork to adorn your walls.
Bodiam, United Kingdom: Moated castle near Robertsbridge in East Sussex, England as seen at sunrise.
However, recent pandemic aside, many Americans have unfortunately focused on belongings first, and we are learning just how many people have poor financial footing for weathering an uncertain storm. Here are a few steps to shore up your castle’s foundation.
Track your expenses. We’ve all heard this advice. I’ll take it one step further and say it must be real-time and seamless. As Tony Robbins says, “Where focus goes, energy flows.” Monitor your expenses on a weekly basis if you are just starting out or monthly if your plan is dialed in.
Pay yourself first, and make it automatic. Make automatic transfers into your savings accounts immediately when your paycheck hits. This will keep you from spending the money. To amplify your savings immediately, eliminate any destructive expenses and reduce consumptive expenses not aligned with your values-based spending plan.
Identify and lower (or eliminate) the four “I”s that will destroy your budget. The four “I”s are interest, investment fees, insurance premiums, and your IRS bill.
Feed your emergency fund. I see so many investors who want to leap into investing without the proper reserves in place. Think about saving six-plus months of reserves and deductibles set aside in cash, money market, and/or a well-structured life insurance policy that you can access in a matter of days if needed. You can also think about creating a ladder of these funds so you can keep them working hard for you.
Keep reading the article “7 Steps to Managing Your Money in a Volatile Economy” here:
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