PSA Thursday tips to end 2020 in a stronger position

The challenges posed by the pandemic have led many individuals to rethink their financial strategies and career paths. As we approach the end of 2020, the question arises: how can one emerge stronger from this tumultuous year? In this article, we will explore effective strategies for business and investment opportunities that can ensure a robust finish to the year. Here are actionable steps that can empower you to navigate through these uncertain times.

Strategies to strengthen your position before the year ends

As we reflect on the unique challenges of 2020, it is vital to maintain a focus on your long-term goals. This year has tested many, but it can also serve as a turning point for those willing to adapt and seize opportunities.

Here are key strategies to consider:

• Maintain your vision: Don’t deviate from your long-term plans due to temporary setbacks.
• Enhance your emergency fund: Aim for a safety net that can sustain you through unpredictable circumstances.
• Regular investments: Automate your contributions to benefit from market fluctuations.
• Utilize lump sums wisely: Invest any unexpected income judiciously.
• Expand your skills: Take advantage of online learning opportunities.
• Create something original: Use this time to innovate and develop new products or services.
• Consider building a team: Plan for future growth by identifying potential hires.

Keep your plans intact

Amidst the chaos, the temptation to alter your life goals can be strong. However, it is essential to stay true to your original aspirations. For instance, if you have contemplated starting a business or pursuing a passion project, consider whether the current situation truly warrants a change of plans.

Reflect on your financial readiness. A detailed assessment using a spreadsheet can illuminate whether you have the necessary resources to pursue these goals without compromising your stability. If your analysis is favorable, take the leap. Fear should not dictate your future.

Boost your emergency fund

Financial security starts with a solid emergency fund. Ideally, aim for a reserve that covers 3 to 6 months of living expenses. If you are in a precarious employment situation or are self-employed, consider increasing this to 6 to 9 months. This buffer can provide peace of mind and allow you to navigate unexpected challenges without added stress.

For more in-depth guidance on this topic, refer to our PSA Thursday episode on building an emergency fund during an emergency.

Invest regularly to take advantage of market dips

In times of economic uncertainty, consistent investment can be your ally. By making automatic contributions to your retirement accounts, you can employ a strategy known as dollar-cost averaging. This approach helps mitigate the risks associated with market volatility, allowing you to purchase more shares when prices are low.

Consider setting up a recurring deposit to take advantage of this strategy. Make it a habit, regardless of market conditions.

Invest lump sums strategically

Unexpected financial windfalls, such as bonuses or proceeds from sales, present an excellent opportunity to invest. Instead of holding onto this cash, consider the following options:

• Invest in a side hustle or startup.
• Purchase rental properties as a long-term investment.
• Contribute to your retirement accounts.

Aim to invest these funds in assets aligned with your financial objectives and risk tolerance, ensuring that your money works for you rather than sitting idle.

Take online classes to enhance your skills

The digital age has made learning more accessible than ever. Use this time to explore online courses that pique your interest. From photography to programming, expanding your skill set can lead to new opportunities and enhance your marketability.

Investing in your education now can yield significant returns in the future, particularly as industries evolve and adapt to new trends.

Create original work as a pathway to entrepreneurship

Channel your creativity into developing something unique. Whether it’s a novel, an app, or a blog, now is an ideal time to explore your passions. Not only can this be a fulfilling endeavor, but it can also lay the groundwork for a future business.

Consider starting a low-cost venture that allows you to grow your portfolio and skills simultaneously.

Think about hiring a team for increased efficiency

As you plan for growth, consider hiring contractors or freelancers to help with specific projects. Whether it’s renovating a rental property or enhancing your online presence, delegating tasks can free up your time and allow you to focus on higher-level strategy.

Many skilled professionals are seeking flexible, remote opportunities, providing a chance for you to build a team that can support your business ambitions.

Stick with broad-market index funds for stability

While the allure of individual stocks can be strong, it is generally advisable to allocate the majority of your investment portfolio to broad-market index funds. These funds provide diversification, reducing risk and helping to smooth out the volatility inherent in the stock market.

By maintaining a diversified approach, you position yourself to weather market fluctuations more effectively.

Expect volatility and prepare for it

The market can be unpredictable. For example, March 2020 saw one of the most significant single-day drops since 1987, followed by a swift recovery the next day. Understanding that volatility is a part of investing can help you maintain perspective and avoid rash decisions.

Stay informed, but do not let market noise dictate your investment strategy.

Additional resources for further learning

• 7 Expensive Mistakes That Rental Property Investors Make – eBook
• Your First Rental Property
• PSA Thursday episode on Building an Emergency Fund
• One Percent Challenge
• Start a Blog

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