Global Opportunities Beyond the Radar

Financial Stress: Banish Them With These 6 Steps Today

Young businessman standing on edge of rock mountain

 

Ever gone to bed and your mind keeps rolling like an adding machine?

Last July, in America, 77% of people reported ‘feeling anxious about their financial situation.’

58% feel that finances control their lives. And 52% report difficulty controlling their money-related worries.

The worst sensation is when it feels like a financial situation could mess up your life. You see others around you happy. Looking forward to holidays. While you wait for resolution.

I’ve only experienced such worries once before. When a leaking property we owned in Europe looked to be very difficult to remedy, sell, or even rent out.

As a savvy legal friend advised me, that problem, like most, could be resolved. There is a process to things. And sometimes you’ve just got to go through that process.

I was anaesthetising the problem with half a bottle of wine a night at the time.

At least you got something out of it…’ she joked.

What I wanted to look at here is the process of becoming financially resilient. So you can be permanently free from the money worries mentioned.

After two decades in business, finance, and the global markets, here are my top suggestions. And how to put them in place.

 

The key is to build diverse income streams

 

Don’t just keep the wolf from the door. Have a few different doors.

Financial advisers will tell you to ‘build a savings buffer’. Enough to last six or 12 months.

Agreed. But this is just buying time.

If the job market is tough — as it is now in certain areas — fallback beyond savings could give more resilience.

Of course, it’s no easy feat to set up different income flows. It takes time. But here’s some top flow suggestions:

It’s in the good times that you need to take whatever surplus you can muster and throw some investment into some of these areas above. Then, when the bad times come, you’ve got options.

 

 

Holding gold and other hedging instruments

 

Richer investors often turn to gold to hedge their wealth in times of crisis.

But here’s one thing that scared me. During the March coronavirus panic-selling across the world’s stock exchanges, the gold price also fell.

Sure, it has bounced back now that there’s some sense of control. But, in mid-March, when fear overtook the markets, there was a real scramble for cash and liquidity.

And the realisation that when it comes to basic survival, gold may not be a ready means of exchange.

My own view is your best wealth hedge comes from investments across different countries, currencies, industries, and sectors.

If this country is hit with another major earthquake or the distinct likelihood of volcanic eruption, your wealth in Australian, British, or multinational companies may be spared.

If you’re a property guru and believe the only place ‘where things happen’ is Auckland, I’d also be questioning that strategy. This is a fine city. But it exists across a youthful volcanic field.

And when you consider the fundamentals of income multiples and rental margins, current prices do seem rather rich.

 

Protecting the wealth and income streams you’ve built

 

Finally, once you’ve built ownership in some productive assets, it’s wise to structure ownership to protect your haul from the rats of life.

Sadly, there are more and more people out there looking to take things that don’t belong to them. Things they’ve not worked for.

Such people exist in business, government, and even within families.

One of the best ways to mitigate your own personal ownership risk is to use separate legal structures. I’m talking companies and/or trusts.

And, again, some assets across different jurisdictions.

Like most things in life, financial resilience does not happen by accident. It takes work and planning. Financial education and savvy.

Money does not buy happiness in life. But it can help protect you from the wolves.

 

I almost missed the most important factor…

 

I’ve noticed, over the years, the people who tend to do well in business and with money tend to be kind.

They’re willing to help others. And have a reputation for doing so.

When you help other people open their doors, you’ll find the door is also open for you. At least more of the time.

The more doors open to you, the more financially resilient you and your family will be.

 

Regards,

Simon Angelo

Editor, Wealth Morning

(This article is general in nature and should not be construed as any financial or investment advice. To obtain guidance for your specific situation, please seek independent financial advice.)

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