Investing is a critical strategy for building wealth. Everyone you know is talking about mutual funds, stocks, bitcoin, cryptocurrency. And if you are like me, then you have friends bragging about their high returns from investing in IPOs (initial public offerings) and how that extra money they made is helping to pay the bills in light of how high inflation is right now.
Now more than ever, it is critical that everyone is investing the smart way.
We can’t afford to make financial mistakes in an environment with high inflation and increasing interest rates because these mistakes will inhibit your future financial prosperity.
It is increasingly probable that a US recession is coming later this year or early 2023. Contagion from this recession will impact the entire world. I want you to take action and not let your financial situation worsen as the economic outlook becomes more challenging.
Here are three practical and easy strategies you can consider implementing so you can financially withstand the looming negative impacts of a recession.
Tip 1: Switch to a high-interest savings account
Your emergency fund, that “rainy day” money, should be roughly three to six months of income. Start creating your emergency fund by stashing away funds each month into a high-interest savings account. Uncertainty is the new normal, and the need for an emergency fund is now greater than ever.
You will need to open a high-interest savings account and start regularly depositing money until you have enough funds to replace three to six months of income. Start with what you have, whether it be $100 or $10,000 per month, and with consistency, you will be able to have the emergency fund and be ready to weather any “rainy day” that comes your way.
Tip 2: Get rid of your high-interest debt so you can have more money to save and invest
You can start by paying down that credit card with the lowest outstanding balance while making minimum payments on the other credit cards (that’s if you have multiple credit cards and loans). Gradually work your way to paying off all the credit cards, and then you can free up more money for saving and investing. To stay disciplined, set up standing orders or automated withdrawals to the credit card account so you can keep on track.
Other types of high-interest debt are your credit lines, your payday loans, and hire purchase installments. With rising interest rates, these products are all expensive debt to have as you pay a lot of money in interest costs to be able to pay down the amounts you borrowed. Use the same principle and pay them down as soon and as best you can.
Tip 3: Shift your investing strategy to focus on quality companies
Start learning about which types of stocks do well during a recession and pick a group of three to five companies you are really familiar. These will be the stocks you research and add to your portfolio.
As an experienced investment strategist, this is where I can really take you into a place of abundance with money from investing. Imagine having passive income each month from dividends or capital gains from your investments. This can definitely go a long way in creating financial security.
Money loves speed. Take action today with these three tips, and you will see a positive financial impact.