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5 Steps to Building Financial Resilience

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1. Assess your current situation

Uncertainty can be a major source of anxiety

To determine the source of stress and if it’s warranted, take stock of your:

Financial self-awareness is positively associated with greater financial satisfaction, and stronger spending and investing decisions.” (source: Psychology Today, 28/10/19)

 

2. Prepare for the worst-case scenario

If you were to lose tour job or sww a prolonged drop in your retirement savings, what could you do?

Various options can be considered:

You can then “stress test” your financial plan to account for these scenarios and begin preparing as best you can.

 

3. Break goals into small chunks

This helps ensure they are specific, measurable and achievable.

By setting smaller goals, you can take action to make progress. Research has shown that achieving quick wins makes people more likely to achieve their financial goals. (Source: The Motley Fool, 29/07/19)

 

4. Improve financial knowledge and openness

Educate yourself as much as possible.

 

You can also take steps to break financial taboos with loved ones:

  1. Start with simple conversations about experience or advice
  2. Build to more concrete discussions about family finances
  3. Ask questions about goals and back up plans
  4. Consider seeking advice from a financial professional

“The ability to talk about money is one of the most important skills for building financial literacy.” (Source: CNBC 30/04/19)

 

5. Create long-term, purposeful goals

Setting the right goals will help you define your own parameters for success, which in turn keep you focussed and motivated.

To achieve these longer-term goals, you may consider vehicles that have historically provided better returns over time.

it is also important to monitor goal porogress regularly, to allow for adjustments as needed to ensure you stay on track.

 

 

Small stocks are represented by the Russell 2000 Total Return Index, which measures the performance of approximately 2,000 smallest-cap American companies in the Russell 3000 Index. 

Large stocks are represented by the Russell 1000 Total Return Index, which tracks the largest 1,000 stocks in the Russell 3000 index and represents about 92% of the US market. 

Corporate Bonds are represented by the Bloomberg Barclays U.S. Corporate Bond Index, which measures the investment-grade, fixed-rate, taxable corporate bond market. It includes USD denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers. 

Alternatives are represented by the HFRI Fund Weighted Composite Index, an equal-weighted index that includes over 2,000 constituent hedge funds which have at least $50 million under management or have been actively traded for at least 12 months. There are no fund-of-funds included in this index. 

Treasuries are represented by the Bloomberg Barclays Treasury Index, which is the non-securitised component of the Bloomberg Barclays U.S. Aggregate Bond Index. The index is based on public obligations of the U.S. Treasury that have remaining maturities of more than one year. 

This article contains general informaiton only and does not take account of an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision.