Fear of not having enough money to support yourself and your family is one aspect, but now, the pandemic has added another layer of worry – what if you are made redundant?
This has now added a new strain and for some this has had an immediate effect – pay cut, sudden drop of income or reduced consulting work.
For others, it is a lingering worry that it may hit them at any moment. With the travel industry coming to a complete halt, this alone has impacted airlines, restaurants, bars and other businesses that rely on people traveling. The side-effects will be felt more in the next 9-12 months to come.
You may remind yourself that you have enough in your emergency fund for the next few years, but on the other hand you are worried whether it will be enough and what will happen after? What if the pension payments will be paused and what if you sell the investments?
That is not the way out. It will solve the short-term problem but not the main retirement or long-term planning. Whilst you are able to work, you can always earn money – once you retire that’s a different story.
So, what can you do?
1. Do not worry – don’t be scared of staying without money
This may sound controversial but it’s the fear that stops you from making sound decisions. Studies have shown that we take more risks to not lose than to gain. This irrational yet second nature logic hinders us from placing our money correctly. We prefer the money to be in our bank “safe” rather than in investments and when we hear bad news on the television (which is 80% of the time), we panic.
Psychologists advise to get rid of the fear of staying without money. How? Some advise to sit down and hash out a plan “what if tomorrow you lose your job”. They believe this allows you to face the situation and build a plan, which will ultimately provide internal security as now you will have a plan.
2. Reduce money wastage
These are the times that everyone tightens their belts. Reduce or eliminate expenses that you do not need, such as shopping for clothes, going out to restaurants or have a better grocery plan. If you want to go on a holiday, take a day nearby, go for a hike and a picnic. Discover places near you without having to spend on hotels, restaurants, flights or long drives. By staying in your country and region, you discover local gems and help your local economy.
A good way to start and test the concept is to look at your bank or credit card statement and see what expenses you could have done without. Some people will see that one cup of coffee at Starbucks a day can save you between €150 and €300 a month or €1,500 to €3,000 a year, or if you smoke maybe an average of €3,500 a year expense on cigarettes might motivate you to quit.
If you turn it into a project and make an adventure to reduce those costs, then it won’t seem like a torture but as a positive change to your everyday life.
3. Place your money – Send your money to work
Money must go to work. Why? Because by sitting in your account, it loses value. Your dollar today will not have the same purchasing power in a year. You will be able to buy less with it. That’s why it must work.
Investments as we know do carry a risk, but so do our jobs and paychecks. What if tomorrow we lose our job? But we don’t think of our employment being risky, so why are we scared to send our money to work?
In placing your money, you have different options:
1. The stock market – such as S&P 500 Index or individual shares such as apple, facebook or amazon. Simply call your banker and ask him to buy the shares you want.
2. ETF Funds – these can be ETFs (exchange traded funds). These are funds that group stocks, bonds and other investment vehicles into one and sell them as a fund. You can also purchase these through your bank.
3. 10, 15 and 20-year savings plans – these are long-term regular contribution plans such as provident funds or the S&P 500 Index Savings Plan. The S&P 500 Index plan allows you to contribute on a monthly, quarterly, semi-annually or annual basis. This plan guarantees your savings not to reduce in value and a minimum return of 4% or the S&P 500 Index return, whichever is the greater. Click here to find out more.
4. Fixed income private placement products such as the 12-month firewood plan. Such plans pay a fixed income every quarter directly to your bank account. These plans offer an annual fixed income return of 11% without locking your savings for a long period of time. In 12 months time you can redeem your funds or leave it for another 12 months at the same rate. For over seven years, the 12-month Firewood Fixed Income Plan has been providing a steady passive income to its investors. Click here to find how it works.
Financial concerns are the biggest worries we face. Financial anxiety is rising more than every. Now you need your funds to work more than ever.
Contact us for more information on the 12-month Firewood Plan.