Updated: May 26
You may have heard recently, all the media talks of inflation being at its highest since the 70s, you will have also heard of rates rising, all of these talks has generated fear in the wider community, as hundreds of millions of people have not experienced such times. What can we do to ensure we keep our heads above water?
The bible puts it well about what’s called the armour of God, we too can use this analogy in the investing world and putting on the full armour of investing, so that you can weather any storm the economy throws at us. So here are 5 ways on how we can put our armour on during these uncertain times.
1. Stay away from bad debt and pay off bad debt as soon as possible. (Your shield)
Ensure you say no to the following, online loan sharks, personal loans and margin loans. If you currently have these kinds of loans, plan a measured response to remove these bad debts.
2. Avoid buying depreciative type assets (your leggings)
These are items such as a boat, a car, a quad bike, brand new furniture. Nothing will sweep you from your feet like depreciative assets.
3. Make a budget and cut unnecessary cost (your breastplate)
Record all your expenses for each month, record your earnings and see what is left, always build fat into your expenses. Also cut costs where you can. If you are spending what you are earning then you will be exposed and be found without the breast plate.
4. Keep some cash on the side (your sword)
Keeping 10-20% cash on the side will help you in case your mortgage repayments become high, or you see good value on the stock market and are able to capitalise. You will want to be in a position to strike when equity assets are cheap.
5. Job security (your helmet)
Sometimes unemployment can plague our economy, so ensure you have good job security, if not find a job, study courses, do a uni degree or a trade (make yourself valuable) if you have your own business keep a good relationship with customers and keep improving your business model. This will keep your mind healthy, money coming in and provide adequate protection.
All of these combined will ensure you are ready for any kind of economic event and that you have your full armour on. Your armour will protect you from become broke, but will also free up cash to use your sword, as offence is the best defence, Warren buffet puts it well.