Let’s face it—no one can predict the future. The entire world is facing tough times that most of us have never experienced before. And with global financial markets shifting unpredictably, it is also tough to know what to do when so many changes are happening in our economy.
However, it is still possible to create a strong investment strategy to help lower your risk and increase your return on investments.
You might be wondering how to prosper during these tough times. As a fellow millennial, here are three tips that have worked for me:
1. Do Not Panic, There is Hope for the Future
During uncertain times, it is easy to make emotional decisions that will impact you financially long-term. With so many unknowns, you may feel overwhelmed by the idea of investing in the financial markets.
To help calm your nerves, understand that financial markets are always cyclical. For example, did you know that in spite of its ups and downs, the U.S. stock market has cumulatively increased in value over time?
Try to stay in a positive space when it comes to the future of your financial stability. This will help ensure that you are on the winning end of future growth. You would not want to let fear prevent you from taking part in an opportunity that could prove valuable in the future.
2. Remember that Cash is King—or Queen
Amidst layoffs, volatile financial markets, and a shaky economy, you will want to set aside a higher than average amount of cash for personal and investment purposes. I recommend reserving 25 – 30% of your portfolio in cash, so when a good investment deal arises, you will be prepared to take part in it.
A cash reserve will also help you maintain your peace of mind in case you need to draw from it to cover an emergency expense. It is helpful to keep your spending account separate from your investment and savings accounts.
3. Examine and Adjust Your Portfolio, If Necessary
It may be a good time to readjust your investment mix. Many investors like to follow the investment guidance and strategy of Warren Buffet, a long-time investor and CEO of Berkshire Hathaway. Having lived through several economic recessions to become one of the wealthiest people in the world, Buffett certainly knows a bit about investing during periods of economic uncertainty. Across investors, including Buffet, here is some advice on investing:
- Invest in value stocks—These are stocks that are selling below their intrinsic value and whose value is likely to increase in its industry.
- Hold 5-10 companies in your portfolio—Focus on industries and companies you believe are thriving and will continue to prosper in the future.
- Craft an investment plan that fits you—What are your financial fitness goals and what is your risk level? Be sure to take into account the various financial markets and avenues available for investing, including stocks, commodities (such as silver and gold), cryptocurrency, index, ETF, and mutual funds.
Finally, know when to cut your losses. If you are holding on to an investment in an industry that you believe will face challenges in the future, then it may be a sign that it is time to sell it and free up your resources for a better investment.
Shirley Okereke is a revenue growth and marketing expert, with experience leading over 200 campaigns for tech startups, NGOs, and governmental organizations throughout the U.S. and West Africa. She specializes in working with growing startups and organizations to quickly develop strategies to help them achieve their revenue targets and grow their customer base. Shirley obtained her M.B.A from INSEAD Business School, with a focus on finance and entrepreneurship.
You can send a message to Shirley on LinkedIn
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Disclaimer: The content in this article is not intended as, and shall not be understood or construed as, financial advice. The information contained in the article is intended to be used for informational purposes only and is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. Although best efforts are made to ensure that all information is accurate and up-to-date, unintended errors and misprints may occur.