In fear of a domestic economy or a recession, 17% of Americans are starting to keep their money at home. However, it turns out that hiding money at home can be costly. There are also quite a few Americans who say that the number of times they look at their portfolios has become more frequent due to the impact of recession.
On October 11th, the topic of whether and when the United States is in recession continues, prompting many Americans to make mistakes that may be expensive when dealing with money-related issues.
In fear of a domestic economy or a recession, 17% of Americans began to keep their money in their homes in cash.
This is the conclusion of US insurance giant MetLife through a survey of 8,000 American adults. Twenty-one percent of respondents said they are becoming more conservative when dealing with money-related issues.
It turns out that hiding money at home can be costly. For example, if you keep your money at home rather than in a bank account, you can't take advantage of the many benefits of compound interest. In the long run, compound interest can make your pockets more and more drums. Warren Buffett has a special interest in emphasizing the importance of compound interest, and often quotes Einstein's phrase "Complexism is the eighth wonder of the world." Compound interest can exert great potential under the influence of time. Buffett's success can be said to be inseparable from his long-term persistence.
In addition, inflation will devour a portion of the value of money, so hiding your money at home is not conducive to achieve your long-term financial goals.
In an interview with CNBC Make It, Erin Lowry, author of the "Broke Millennial Takes on Investing", said, "Keeping money at home is the worst thing you can do. One. In addition to the negative financial impact, this may also result in cash being forgotten or damaged."
At the same time, if young people are too conservative on investment issues, then you lose the opportunity to make more money. Investment company Vanguard found that the average return on aggressive portfolios was actually higher than the conservative portfolio between 1926 and 2015.
Choosing to keep money at home is part of the choices made by Americans affected by the recession debate. According to MetLife's survey, about 41% of Americans said that they were more likely to check their portfolios than before because of the market's possible remarks.
Lori said: "This is absolutely wrong because it will make you crazy."
If you have reasonably set up your portfolio and the portfolio can withstand the ups and downs of the market, then frequently viewing the portfolio will only make you anxious, and you are likely to give emotionality due to anxiety. reaction.
"You need to control yourself," Lori said. The biggest mistake you can make, especially when you have a very reasonable portfolio, is to sell your investment because of panic. If you exit the market and then wait too long to re-enter the market, then you may miss the rebound. In the long run, this can be a costly mistake.
Creating a sound portfolio means you have to invest money in different asset classes, including stocks and bonds. In addition to having a balanced portfolio, the following three simple and proactive practices help mitigate the impact of a potential recession on your financial situation:
1. Create a savings buffer
To survive any financial setbacks, you need to have emergency savings. Tiffany Aliche, founder and personal financial expert at The Budgetnista, said, "You must have at least one fund that can sustain three months of spending." She added that, to be precise, this applies. For those who think they can find a job quickly.
For example, nurses can set their own emergency savings to maintain a three-month cost of living because of the high demand for nurses in the United States. In other words, it is easy for a nurse to find a job. However, if you are a professional, such as an aerospace engineer or psychologist, if you are unemployed, you will soon find a new job with a relatively low probability. As a result, the scale of emergency savings that can sustain three months of living expenses is obviously not enough for you. The size of the emergency savings you need should be the cost of living that can last for nearly a year or more.
2. Cut the spending
Nearly half of Americans said they were Moonlight when they accepted the MetLife survey. If you are one of them, then you need to take the time to adjust your financial situation, otherwise it will be difficult for you to survive the economic downturn.
In order to make your financial expenses orderly, you need to develop a monthly budget that suits your actual situation. To save money, you can bring lunch to the company, or choose a cheaper cable TV package, or you may need to make some bigger changes, such as renting a cheaper apartment.
If you have a good hand and a large savings buffer, you won't feel anxious even if you are unemployed.
3. Continue to invest
Financial experts pointed out that the best strategy so far is to continue investing and deposit money into retirement accounts on a regular basis. This strategy is especially suitable for long-term investors.
It is undeniable that if you plan to make long-term investments, you must start your investment and financial management now. The sooner you develop good investment and financial management habits, the better, no matter how much wealth you have, at least you won't let it only depreciate there.
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