There's this saying about anything that can go wrong will probably go wrong..
In the real world, this isn't always the case, but I guess prevention is way better than cure.
Studies have also shown that many of the potential things that could go wrong that we worry about don't tend to materialize into reality.
Our mind has this tendency to magnify the potential negatives and overlook the potential positives.
The baseline is that the unexpected will keep on happening, no matter how much we prepare or make room for it.
I tend to prefer solving such situations at the onset before they get out of hand. An interesting thing that I've noticed is that sometimes it's only when the situation gets out of hand are we able to truly solve it.
Cash is king, they say. Liquid assets are a bit step ahead in terms of flexibility and can easily be converted to cash.
Having liquid assets that generate some form of return that beats inflation seems essential for financial stability and growth, especially during uncertain times.
In uncertain economic conditions, the importance of having liquid assets is always emphasised. Some of the main reasons are:
Emergency Fund: Liquid assets serve as a crucial safety net for unexpected expenses or loss of income. To a certain extent, they provide peace of mind and financial security.
Opportunity Seizing: When market conditions are volatile, having liquid assets allows you to capitalize on investment opportunities that may arise suddenly and for cheaper the cost.
Avoiding Forced Sales: In times of financial stress, liquid assets prevent you from having to sell long-term investments at a loss to meet short-term needs.
I think this one is what I've battled with lately. I'll rather sacrifice forego some my short-term needs than sell my long-term investments.
In the traditional world, acquiring liquid assets that generate returns includes:
I'm mostly familiar with no. 1 and 2 but the aim is to balance liquidity with return.
Sometimes, it's hard enough to have easily accessible funds, and even harder to ensure your money isn't losing value to inflation over time.
Having a portfolio of liquid assets can significantly improve our ability to weather economic storms and seize opportunities.
More than preparing for the worst, it helps positioned ourselves to make the most of whatever situation arises.
It's true that not everything that can go wrong will go wrong, being prepared with liquid assets ensures that we're ready for whatever does come our way, an urgent problem to solve or a portent opportunity to capitalize on.
Thanks for reading!! Share your thoughts below on the comments.
