Life is full of uncertainties. Have you ever concerned about being unable to generate income if something bad happen to you? So, preparing for unexpected is crucial as you can protect your income from the risk of unemployment, illness, and accidents.
Emergency Fund
With emergency savings, it can help you to protect you against unforeseen expenses and loss of in income. Start building your emergency fund which should be generally about 6 months of income. Recently, I apply this method on my investment which creating the ‘backup money’ in order for me to do further trading when market is down.
Mostly, my emergency fund will be placed into highly liquid accounts like savings account or short term fixed deposit so that it’s more accessible when there’s need for impulse spending. With this method, you are not only protecting your capital but you could earn some little interest as well.
Diversify Your Income
Everyone whether employee or self employed also need to find some ways to reduce his dependence on his daily job. Besides that, building more passive income streams so you won’t solely depend on your monthly wages. Building more sources of income also minimize your financial burden if you lose your job.
I started to ‘enter’ market and build money from investment since year 2006. Most of the time, I try to diversify my investment portfolio in order to enjoy different kind of dividend and risk appetite. From there, I can make more analysis on each type of investment vehicle and determine which type of it much more suitable to invest based on market timing.
You can try to start invest from low-yield return to high-yield return. Do you know why? Low-yield return means less risk while high-yield return means more risk. If you start by investing in high yield stocks, unit trust funds, or real state, then you may loss your hard-earned money within short moment. At the end, you will not have any savings!
So, try do not always looking for fast money earning if you’re just come out working. If you have 1 Million, then it’s fine to take out just 10% of it to invest in high risk investment. But, if you have ‘just build only’ 10% out of 1 Million, then better don’t try into high risk investment. So, take my advise!
I’m agree that by placing our emergency fund into highly liquid accounts not only protecting our capital but also we can gain some interests in there.