If you are an investor you need to dominate the art of diversifying
Similarly as in the world of real estate, it is said that the key for a good purchase is in the location of the property, in the investment world is also considered that the place (or places) where the shares are located is the key for avoiding shocks due to market fluctuations. If you are an investor, it is very healthy to master the art of diversification, because if you combine a portfolio of well-diversified investment with a horizon of three to five years, you will be able to resist the majority of financial storms.
As we can never guarantee what will happen in the market, regardless of their condition or current characteristics, diversification is and will continue to be the rallying cry for planners, fund managers and investors. Before you decide to invest your money, you should spend time in designing an investment portfolio. Here are some tips related to diversification:
- Do not put your wealth on the same place, extend it by creating your own investment fund in companies that inspire confidence, either by the strength they show or simply because you feel comfortable when you use them in your everyday life.
- Consider including funds in the bond market. In the long term, it is healthy to incorporate this type of asset which, though less profitable, provide you some coverage against uncertainty and market volatility
- Invest regularly. Do not make the mistake of making an investment and sit and wait for the evolution of the price of those shares. Your financial “building” must be built daily, constantly putting your bricks one by one.
- Learn to sell. Investing usually associates with the purchase of a given set of shares, hoping to achieve profitability within a reasonable time; that’s fine, but you can’t put the investment in automatic mode. It is absolutely necessary that you keep up with your investment, meet the forces operating in the market and the general conditions in a given time; you must know what is happening in those companies in which you invested, so you can identify the right time to get out of that market, by selling all or part of your actions.
Even in the worst of times, investing should be a fun experience. With some knowledge, a lot of discipline and focusing on diversification, the investments you make will become a highly rewarding habit.
It’s said that money is the root of all evil. Some popular sayings like: “more money, more problems”, or “blessed are the poor” invite us to think that on occasions, it’s preferable to not have money because it changes people and, in many cases, it’s the root of severe personal and family conflicts.
At the same time, when you have enough money, you feel that life is more bearable, less worrisome; what previously overwhelmed you, now you see from another perspective. Having financial freedom makes you see the world with more light, you live carefree, you breathe air of safety and self-esteem, you can afford to buy a house, a nice car, enjoy holidays and of course pay religiously all monthly receipts and obligations which you have committed to.
Historically, money has always been stressful, but lately, the list of elements that generate tension and anxiety is being led by issues related to money, and with good reason. If we recognize how difficult it is to earn a living, it’s no wonder that we are so sensitive about the issue of money, and there are so many people that suffer day after day, building irreversible consequences for their physical and emotional health.
Pay attention to these facts about how money impacts stress levels
- The lower the income, the greater the propensity to stress. The American Psychological Association (APA) has shown that in recent years, people with lower income are more likely to suffer from stress. This contrasts with a study in 2007, in which a significant correlation between income and stress levels experienced by people who participated in the study was not found.
- Feeling the inability to pay for health care can really make you sick. Money problems cause stress that can lead to health complications for two basic reasons: firstly, you become ill due to stress; but at the same time, you neglect your health because you are too focused on money problems and also because you’re convinced that you do not have enough slack to allocate some of that money to health care, or you feel you must save the little money you have to meet mandatory and extremely necessary expenses. Under these conditions, health rapidly deteriorates, increasing vulnerability to serious events such as strokes or heart attacks. Moreover, the loss of health, the burdens and concerns, significantly influence the responsiveness to overcome the crisis; you cannot think straight, much less evaluate opportunities and choices you have to take to make smart decisions based on your personal circumstances and family. This generates more stress and a tendency to eat in an unhealthy way, to overeat and to have irregular sleep patterns. As you can see you get into a vicious circle that is difficult to escape
- You will never be able to buy with money one of the best antidotes for stress. In most cases, emotional support from family and friends is the only truly effective way to reduce stress and combat its effects. The simple fact of having the support of people who may help you in your worst moments, increases your tolerance to uncertainty and dramatically reduces stress levels. A survey by the APA in 2014, concluded that 43% of people who reported not having emotional support, increased their level of stress in the last year, compared with 26% of those who acknowledged such support.
You may have noticed the importance of preventing stress from taking root in your life, and even more money-related issues. To prevent this, the American Psychological Association makes a set of recommendations which are briefly summarized as follows:
1) Do not panic or fall into negativity; on the contrary, you should remain calm and focus your mind on the solution.
2) Identify factors that really cause financial stress. This is a must to develop specific action plans to overcome each of these factors.
3) Assess the way you are handling money related stress (smoking, alcoholism, depression, abuse, violence, etc.) and establish the necessary corrective measures before the conflict becomes more difficult to resolve.
4) Avoid the routine and find new ways to help turn bad times into real opportunities for personal growth.
5) Ultimately, if none of these recommendations take effect and you’re still overwhelmed by your financial worries, it will be very useful and convenient to seek professional support.
Convert savings into a habit is useful, easy and fun
It is likely that throughout our lives we go through periods of major economic problems. Growing debts and unpaid bills that accumulate are the first signs that announce that we are on the threshold of a financial problem.
With the emergence of these problems many people try to find the possible culprits of their bad situation; but all they do is lose energy and time while weaken personal relationships including family.
Faced with a poor economic situation, first thing to do is prove enough emotional strength to stay calm and look optimistically for the future. Think that what we are talking about is just problems associated with money, and money problems can be solved.
Always try to get the money you need doing what you really love
When you have the ability to satisfy all your financial needs, without relying on anyone nor doing something that you do not like, you may say that you enjoy an economic wellbeing and that you have financial freedom.
The opposite of financial freedom is the financial dependence, this is when people are dependent on others to provide them the money they need to cover the expenses for their needs and support their lives.
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