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Tuesday, June 14, 2016

Financial Precautions You Should Take In An Uncertain Economy

During uncertain economic times, you can soothe your fear by taking some financial precautions to protect yourself and your money. Fear is about uncertainty. It's about not being able to predict what will happen next. This unpredictability breeds anxiety. And in the midst of uncertainty, fearless people react very differently than fearful ones do. 

So here are the financial precautions that fearless people take.

100% Principal Protection
Losing your hard earned money is horrible. The last thing you want would be having to worry that your hard earned money are all gone over the night. So during market uncertain, keeping the principal safe with no downside risk is the number one priority. 

Diversification to Worldwide
Never put all your eggs in one basket. It is common sense that you do not want to put all your money into only one investment vehicle and solely relying on it to make more money for you. That's like walking on a thin rope! Hence, diversified to all the world's major stock market indices would be the best bet during uncertain economy.  

Potential for Growth
Being safe is the bottom line, but the upside gain would be desired as well. The return of the investment should have 100% participation in the growth performance. Advanced investors usually will seek out for those company shares with what they deem good growth potential. Otherwise, you may just pick on a broader investment such as MSCI Emerging Market, S&P 500 and so on, that you think they may grow tremendously in the future.

Expose to Foreign Currency 
It has been a bumpy ride for Malaysian Ringgit, especially in the past one year. MYR per 1 USD went from 3.708 in June 2015 to as high as 4.458 in Sept 2015, and now back to 4.089 as of June 2016. So it would be wise if you are able to take advantage on investment that expose to foreign currency.

Online Accessibility
Online accessibility makes life so much faster and easier! You would want to have the control in your hand and all the information of your investment available to you at your fingertips. Be it your personal information, investment transactions and also performance, they should be all available on the internet! 

Plan ahead in case of unfortunate events. You would want to be able to nominate the beneficiaries that will receive the proceeds of your investment with hassle free, especially if one is without will or trust written. Just like your EPF or insurance policy, nomination is needed to ease the whole process of knowing who to transfer the proceeds of the investment to.

All in all, if you don't apply what you learn then learning loses most of its value. So now all you have to do is to reflect upon and take action now! Comment below if you have any ideas to contribute as well! Happy investing! 

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