These past few years have left us shaken. Institutions we believed to be steadfast have proven fragile – and as a society, we are all seeking stability and certainty. We want to be sure that every step we take is the right one for us.
Instagram posts and motivational speakers can say that money can’t buy happiness – and it is true; having money is not going to change the way we see the world.
Nonetheless, possessing a healthy reserve of ringgit will make it easier for us to navigate the world. Money allows us to move toward a future where we can take care of our wants as well as our needs; it gives us a cushion to fall back on during lean times, and it gives us the option of taking breaks so that we do not burn out – these things add up to a life where you have the ability to pursue happiness.
As such, economic uncertainty can put fear into the heart of any investor, and may incite you to make unnecessary emotion-driven choices. In an uncertain world, the best anchor is information. If you want to feel secure about your financial future, it is time to look into the data.
Look into the history of your investment company, financial advisor, or the assets in your portfolio, as well as how well they have handled themselves over time. How did the investment company get to where it is today? Who is your financial advisor, and what is their track record over time? How have the different asset classes performed during the last 15, 10, or even five years?
Conservative or high-risk approach
The data that applies to your needs depends on your approach to investing. The conservative approach would be to invest in “set time” horizon-specific assets. This is better for more risk-averse people who have a very clear objective – such as their retirement, or their children’s education – as their primary goal.
The conservative investor will benefit best from seeking out a financial advisor or utilising a robo-advisory tool that is guided by Artificial Intelligence (A.I.), depending on their preference towards being guided.
Financial advisors can provide evidence for the health of different investment assets, which they will then use to guide your choices. Robo-advisors use up-to-date information and A.I.-driven algorithmic investing, and can be programmed to take your risk tolerance into account. Both of these options will give peace of mind to the conservative investor, as they know that their preferences are predominant to the process.
The high-risk approach works for young people who have time to recover from risky speculations that go wrong, or for affluent investors with the resources to invest in multiple assets.
Investors who believe they have a high tolerance for risk should seek out information on what risk in investing really means. High-risk takers must be careful to ensure that they are following their investment thesis rather than being drawn in by excitement when considering where to spend their resources.
Both types of investors still need a diversified portfolio, as no one should rely solely on one asset class – no matter how reliable or exciting – to provide for their future wealth.