Suppose you have inherited a good amount of money from your parents. How will you invest these funds? How do you ensure that you don’t lose the value of your funds due to inflation?
According to financial experts, answering these questions would depend on some of the following factors: where you live, your situation, your income, and whether you need this money to finance your lifestyle or not, are you an expat or a local, your current age, and other details about your situation. What risk do you want to take? A good financial plan is tailored to your situation, not what the latest news headlines show.
In response to questions, Adam Fayad, Founder of Global Online Advisory Firm, said the main reasons why people fail to invest are analyzing and looking too much at scaremongering news, getting emotional and also taking random advice from friends.
Tips for saving your funds against inflation
According to Fayad, successful people in investing tend to do the following things:
- Logic on emotions. So many people buy high and sell low out of fear. Related to this is the concept of “doing your research”, which for most people simply means buying if the price rises, or some other emotional impulse.
- Focus on the long term. A long-term plan should not be affected by the stock going up or down 20%.
- As it is safer, diversify both in terms of time and asset diversification, without putting all your eggs in one basket.
- The last point is especially true for middle-aged and older investors.
- Take advice if necessary. This could be related to taxation, investment or other issues.
- The more complicated your situation, the more likely the advice will bring benefits.
- Don’t try to pick the perfect time to buy assets, also known as market timing, which just doesn’t work.
- And finally, they don’t stay in cash. Cash is 100% guaranteed inflation loss.
- If you buy assets they will go up and down, but even if they go down you don’t suffer a loss (only a downside) unless you sell them.
- No one “lost” money investing the day before the stock market and housing crash of 2007-2008, if they kept their cool. Prices have recovered in 3 years.