Let’s assume that you inherited some good cash from your parents. How will you invest those funds? How do you make sure that you don’t lose the value of your funds to inflation?
According to financial experts, answering these questions would depend on some of the following factors: where you live, your circumstances, your income, and if you need this money to fund your lifestyle or not, are you an ex-pat or local, your current age, and other things about your circumstances. How much risk do you want to take? A good financial plan is bespoke to your circumstances—not what the latest news headlines show.
In response to questions, Adam Fayad, Founder, Global Online Advisory Firm, said the biggest reasons people fail in investing are analyzing and watching fear-mongering news too much, getting emotional, and also taking random advice from friends.
Tips on Saving your Funds from Inflation
According to Fayad, people who succeed in investing tend to do the following things:
- Logic over emotions. So many people buy high and sell low due to fear. Linked to this is the concept of “doing your research”, which for most people just means buying if the price is going higher, or another emotional impulse.
- Focus on the long term. A long-term plan shouldn’t be affected by stocks rising or falling, by 20%.
- As it is safer, diversify both in terms of time and asset diversification—not putting all your eggs in one basket.
- The last point is especially the case for middle-aged and older investors.
- Take advice where needed. This could be to do with tax, investing, or other issues.
- The more complicated your situation is, the greater the chance that advice will add some benefits.
- Don’t try to time the perfect time to buy assets, also known as market timing, which doesn’t work.
- And finally, they don’t stay in cash. Cash is a 100% guaranteed inflation loss.
- If you buy assets, they will go up and down, but even if they go down, you don’t face a loss (only a decline) unless you sell out.
- Nobody “lost” money investing one day before the stock and real estate crash in 2007-2008, if they kept their nerve. Prices recovered within 3 years.