One of the good things about the pandemic is that we can reassess our priorities. We learned to value our health after witnessing the death of over four million people. We must also reevaluate our financial positions, especially after watching the economic devastation.
We heard people say that you should invest during a bear market. But this is not necessarily true. Do your due diligence before investing in anything. Bear in mind that we should not leave our financial future to chance.
You do not want to waste this chance to turn things around. But at the same time, you do not want to expose yourself to unnecessary risk. Let us take this time to weigh the different investment opportunities.
Real Estate
We saw the mortgage rates drop to an all-time low. But experts warn us not to jump on board. One of Bloomberg’s asset management analysts pointed out the risk of doing so. Other financial gurus practically say the same thing. But does it mean that you will let this opportunity pass?
Remember that real estate opens the opportunity to earn passive income. The rewards outweigh the risk. The wise thing to do is to consult with an investment adviser before you make any step. Doing this can lessen your financial exposure.
Let us say that after researching possible real estate business opportunities, you found the perfect property to purchase. Of course, you can straight away apply for a mortgage loan. Or you can reach out to an investment adviser. Both paths are logical. But we are looking for the one that will limit your financial exposure.
If you choose to do this project yourself, you will have to calculate how much money you must pour in to make your investment profitable. Compute how much is your expected monthly rental. But you can skip all of this if you ask for professional help. The investment adviser can design a plan where the monthly proceeds will fully cover your mortgage amortization.
Stocks
Stocks are considered low risk. But considering the amount that you will invest, the loss will be significant. You can lessen your financial vulnerability by asking for professional help. Again, your goal is to stabilize your economic future.
You might want to reach out to firms that offer fiduciary management. A financial adviser from Cardano Risk Management Limited knows that basing your investment on the movement of the stock market is not a wise decision. No one can predict the future. But managers can control their company’s profitability.
With that said, you must review the consolidated financial statements. It will give you a better perspective of a company’s liquidity, profitability, and rates of return. It is prudent to go through the numbers with your investment adviser because he can simplify things for you.
Let us say that three companies caught your attention. Company A offers its stocks at rock bottom prices while Company B’s stocks are at the higher end of the price spectrum. Then Company C’s shares are reasonable. It is tempting to choose Company C, but the wiser move is to review their latest consolidated financial statements.
Your investment adviser can compute the following ratios for you:
- Current ratio – Helps you assess if a company has enough current assets to pay off its current liabilities.
- Cash Ratio – Helps you determine if a company’s cash and cash equivalents can pay off its current liabilities.
- Asset Turnover Ratio – This ratio measures efficiency in generating revenue from its assets.
- Inventory Turnover Ratio – Helps you identify if a company is efficient in selling its inventory.
- Book Value per Share Ratio – Measures the value of each stock.
Insurance
You can also choose to invest in an additional insurance policy. After all, you can never tell what will happen in the future. This type of purchase will give you peace of mind, especially if you have children. It assures you that you can still provide for them even if you are no longer there.
Another type of insurance can also secure your future. Although you can rely on government insurance, it may not be adequate to provide a comfortable life. Investing in another policy will supplement your income in your twilight years.
You can also invest in a critical illness policy. This coverage will give some financial leeway, especially if your illness has economically incapacitated you. It will help you pay everyday expenses and miscellaneous obligations. Thus, you have some peace of mind.
You do not need to achieve financial invisibility. You want some peace of mind knowing that your finances are in better condition than it was during the pandemic. What is even better is that this also extends to your loved ones.
