Monday, October 3, 2011

Things to be Prepared When the Crisis Came

Imperceptibly we've entered the month of October and the market turbulence continues. When we got out (to the trade) before the market drop means the position is more secure. But what about our investments for the long term? What should be done and observed by us in such conditions at these times while waiting and hoping the stock grow up again?

When we waiting for stock (exchange) there are some things we have noticed with our financial portfolio so that we do not make the family's financial situation getting worse. The first should always be considered and taken care of is the amount of the Emergency Fund that we have. Are the numbers still correspond to our needs? Do we ever use in part of the Emergency Fund before and yet repaying again?

Back to the Emergency Fund formula, for those who are still single and do not have children / dependents then it only takes 3 months for monthly needs, or to more easily calculated from the income. For having 2 dependents must provide funds amounting to 6 months income. Whereas if we have more than 2 dependents, Emergency Fund should be prepared for 12 months.

Make sure the number of our Emergency Fund remains adequate and in accordance with our needs and placed on a secure financial products and can be withdrawn at any time. The last thing we do not want to happen is, when the stock was down all of a sudden we're stuck in an emergency, while our Emergency Fund amount is less or does not suit our needs. As a result we have to dilute our investment in financial/ capital market products that are currently the number has definitely decreased.

The second thing we have to consider within current circumstances is to ascertain whether our insurance policy keep running and ready at any time needed. For some of us who have limited health insurance coverage (there's nominal limit per year), check whether our limit and family are still okay and the numbers are sufficient if there are conditions under which we should be treated.

If we buy own insurance (particularly health insurance hospitalization), make sure you have paid insurance dues and make sure the policy is still running (not lapse). Notice also the types of policies and protections that we have, do not get wrong when buy type of insurance. Let us not forget to pay the insurance policies that have matured, if our policy lapse, in an emergency we can not use the insurance to pay the claims of our hospital.

In the current market conditions that broke down as it is today and might have an impact on the economic crisis, the economic situation became unstable. If this happened within a long time, it did not rule on company performance. When the condition worsens it can happen the company where we worked has financial difficulties or even losses. Beware. Therefore, in an unstable condition as now it is not advisable to create new debt, especially consumer debt. Hold first to not buy goods that have not been needed until the condition gradually recovered.

Finally, within the current conditions prevailing 'Cash is the King'. By holding more cash we can use it when needed in emergency conditions. In addition, cash can be used to take the opportunity to invest when prices are stuck down and started up again so that we can invest in a cheap price. Which must always remember is, every crisis or decline in stock prices and other investment instruments, there is always a chance for profit. Then, a genius who dare to take risks will have many advantages.

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