PREPARE FOR THE UNEXPECTED
PREPARE FOR THE UNEXPECTED
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The biggest risk is taking none... In a rapidly changing world, the only guaranteed losing strategy is not to take risks.
The biggest risk is taking none... In a rapidly changing world, the only guaranteed losing strategy is not to take risks.
Mark Zuckerberg, founder of Facebook
Uncertainty can be a big headache, because if a loss was certain, there would be no risk.
Uncertainty can be a big headache, because if a loss was certain, there would be no risk.
4 questions to ask yourself
4 questions to ask yourself
How secure do you consider your wealth to be?
What risks do you expose yourself to on a daily basis?
What events should you be prepared for?
How could you manage potential financial risks?
SPECIAL RISK CATEGORIES
SPECIAL RISK CATEGORIES
personal risk
personal risk
Correlate with health, safety or costs associated with various financial decisions. For example, if you buy a certain brand of car, you will only have to have it serviced/repaired in an authorized service.
inflation risk
inflation risk
When prices rise or fall, your purchasing power changes. You can decide whether you want to buy something now or in a while, but you should be aware that if you decide to buy later, you may pay more.
revenue risk
revenue risk
You might face job loss due to changes in the consumer market, or because of accelerated technologization, or because of pandemics.
liquidity risk
liquidity risk
Some savings and investments may offer higher potential gains, but it may be harder to turn these gains into cash or sell without suffering significant losses.
currency risk
currency risk
Even if, overall, the costs of financing in foreign currencies are lower than those of borrowing in lei, the exchange rate can throw the initial calculations out of whack if the currency appreciates against the leu. In this case, you will have to take more money out of your pocket to cover the loan rate. But the same thing can happen in reverse in the event of a currency depreciation, which is basically the happy case for borrowers who will pay less to buy the amount of the currency needed to pay the monthly installment.
interest rate risk
interest rate risk
Variable interest rates affect both your costs (when you borrow) and your benefits (when you save or invest). Loans with variable interest rates might increase, leading to higher repayments.
It's in your best interest to take out a low-interest loan when interest rates are on an upward trend. If you save when interest rates are on a downward trend, you'll have lower returns on your short-term savings accounts than long-term savings accounts.
It is uncertain whether a car will be damaged or not, but it is certain that if the car sits for a long time in a damp garage, at some point, some parts will wear out.
At the same time, the owner's car may be stolen and he or she may suffer a financial loss.
Risk is the likelihood or threat of damage, injury, loss or any other adverse situation caused by external or internal vulnerabilities that can be avoided by taking certain preventive actions.
(Self)Exposure to risk is any circumstance that may lead to the possibility of a loss whether or not it occurs.
Unfortunately, risks can affect personal or family integrity, the assets we own, and are very likely to make their way into most areas of our lives.
Our assets are permanently exposed to risk: home, car, company, health, income, income, money, equipment, raw materials, jewelry, etc.
PROTECTION
PROTECTION
INSURANCE
INSURANCE
SECURITY
SECURITY
To ensure that our financial plans and quality of life do not suffer, it is important to take a mature look at unforeseen events, as well as needs/wants that may arise in the future.
Insurance usually covers relatively small, guaranteed and known losses in the form of a payment to the insurer in return for the insurer's promise to compensate the insured for the loss covered.
Insurance usually covers relatively small, guaranteed and known losses in the form of a payment to the insurer in return for the insurer's promise to compensate the insured for the loss covered.
A reserve fund is a source of cash to cover some (or all) of your expenses during periods when your income is lower than usual, in case of temporary unemployment or an unforeseen emergency.
Having reserve funds in place can help you avoid poor financial decisions such as taking out a loan at a disadvantageous interest rate or borrowing from other sources that are below the legal limit.
To motivate yourself to put money into a reserve fund, think of it as a utility for which you pay the monthly bill.
It's as simple as "hello".
Money doesn't bring happiness, but once you're faced with unexpected expenses not covered by savings, it can cause anxiety.
In case of force majeure, it would be preferable to be able to cover your expenses for at least 3-6 months from a reserve fund only.
Creating a reserve fund not only gives you psychological comfort, but also financial advantages, because any problems that arise you can solve with the financial resources you already have, without having to borrow or postpone other plans you may have wanted.
Act wisely, think about the future and the importance of anticipation!
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