Money and finances may be a concern for some people. For someone who earns or spends money, or does both, it is important to remember what investment lessons and finance-handling tips time has taught us collectively. One such event that may have left quite a mark on the consciousness of anyone who deals with money, is the 2008 Financial Crisis1.
Also colloquially known as the Global Financial Crisis, the 2008 recession1 has probably affected nearly the entire world. People might have taken quite a while to get a grasp of the happenings and sort out their finances. While there may have been several reasons why the 2008 Financial Crisis occurred, right now, the key thing to remember is that it is behind us. The more important part to focus on is what it has taught us, and how we can implement these lessons.
Key Learnings from the Financial Crisis
Whether you are someone who invests their money or not, know that money lessons may come in handy anytime. Here are some of the investment lessons from the Global Financial Crisis that everyone should be aware of.
• Timing the market
Timing the market is one of the oldest tricks in the book, but that may not make it worthwhile. However, know that it is not really possible to predict the highs and lows of the market and create your investment portfolio based on that. Trying to time the market always may not be practical and may end up causing you more damage than profits. Instead, choose a suitable investment plan taking into account your goals and resources to help you map a suitable investment path. You can either take the help of an investment advisor or get started with an investment calculator to see if you are taking the required step next in your investment journey.
• Make informed decisions
It may be tempting, but it may not be helpful to blindly follow the trends when it comes to investments. Instead, having an investment plan and following it through, may help. Consider taking time to understand the ups and downs of the market, what causes them, and what affects them. Also, consider understanding which types of investments would suit you and why. You may stay actively involved with your investments and be conscious about where you are directing your money.
• Don’t get lured by quick hacks
Many people may lose patience and want to try quick and easy ways to make money. They might abandon their investment plans in favour of simpler tricks that offer faster ways of making more money. However, such ways may lead to losing more money than what was gained. It is preferred to stick to a plan and take slow yet well-calculated, steady steps. If you are only starting on your investment journey, you can start with an investment calculator to help you make a plan.
Besides focusing on investment and multiplying your wealth, also consider paying some attention to keeping your family financially secure in your absence. You may consider using life insurance to do the same. Plans like ULIPs can give you dual benefits of insurance and market-linked wealth creation. However, if you want to keep your insurance and investments separate, you may opt for a term life insurance plan for your life cover.
Events like the Financial Crisis of 2008 happen once in a long while. But they end up reminding you of what is important and what are some of the ways to deal with your money. These learnings from the previous crisis not only help you sail through another crisis if it were to happen, but also might help you with your overall investment journey.