Achieving Financial Immunity in 2022

Immunity” has a Latin origin which means protection or exemption from disease, injury, or work.

It is simply the power to keep yourself from being affected by anything you want to avoid.

In medicine, immunity is a condition of being able to resist a particular disease especially through preventing the development of a pathogenic microorganism or by counteracting the effects of its products. In law, immunity is a special protection from what is required for most people.

Financial Immunity is being able to maintain security and stability for any unforeseen emergencies to the extent that you will not have to depend on third party funding or loans from loved ones or your financial service provider. In 2022 the test of your immunity financially, should be whether you can survive for a minimum of 6months in the event your major sources of income seize abruptly. If the answer is no, then you are not financially immune.

Do You Know Your Immunity Profile?

Knowing your financial immunity is as important as knowing your health immunity. And the most important factors for a secured financial life are to understand how well you are doing financially to keep abreast with the changing life stages. A catastrophic financial event may topple your finances if you are not prepared for the events in the new year. Financial immunity thus empowers you to conquer the challenges posed by any economic reality in 2022.

Given the economic consequences of the global pandemic and the example of job losses and economic downturns in the past three years, being financially immune has become the ultimate need of the hour. The future is uncertain but having a concrete plan helps you sail through the hard times in a smooth manner. It cannot be built overnight as it is a gradual process. The sooner you start investing, the lesser time your financial cushion will take to be ready.

How Do You Build Immunity in 2022?

One of the critical ways to build immunity in 2022 is to create an emergency fund that can give you immunity for at least 6 months. To do this, you need to you need to create an investment plan that has the ability to protect you from financial emergencies.

Your investment plan must be personalized to your situation, and one that is appropriate to meet your financial goals and objectives. This is because everyone is different, so every plan should be unique. Building a good investment plan to help secure your financial goals, requires a careful understanding of some of the basics of investing rules.

The keys below will thus help you to build a sound investment plan for your financial immunity.

Your Financial Immunity Goal

Investment decisions must be made with a clear goal or objective in mind: regular income, liquidity, capital preservation, or growth. The first thing you need to decide is which of those characteristics is most important.

Do you need current income to live on in your retirement years, growth so the investments can provide income later, or is safety (preserving your principal value) your top priority? For example, if you are 55 years or older before you create an investment plan, you really should define your objective (for instance a retirement income plan). This type of objective, for instance, will help you project your future sources of income and expenses, and your financial account values including any deposits and withdrawals. It helps you identify the point in time where you will even need to use your money and once you have a clear time-frame you know whether to use short, mid, or long-term investments.

Be Realistic

Many investment accounts have minimum investment amounts, so before you can build a solid investment plan you have to determine how much you can invest in practical terms. Do you have a lump sum, or are you able to make regular monthly contributions? Some accounts for instance allow you to set up an automatic investment plan starting with as little as GHC50 a month which would transfer funds from your savings/current account to your investment account. Investing monthly in this way is called cedi-cost-averaging and it helps reduce market risk. If you have a larger sum to invest, obviously more options are available to you. In that case, you’ll want to use a variety of investments, so you can minimize the risk of choosing just one. The most important decision you’ll make is how much to allocate to the various investment classes.

Know When to Withdraw

Having a longer time horizon does not guarantee a higher return but it does mean you have time on your side to consider other investment options and strategies that might give you an advantage in the long run. How much time one has can alter one’s investment plans, and it can pivot the level of risk you can take. Just Establishing a time frame(duration) you can stick with is of great importance. If you for instance need the money to buy a car in a year or two, you will create a different investment plan than if you are doing the same to buy a property in 5 years. In the first case, your primary concern is safety – not losing money before the future purchase. In the second case, you are investing in a long-term goal, and anticipating significant growth in returns. What you care about is what choices are most likely to help your account be worth the most by the time you are ready to make your withdrawal.

Know Your Risk Profile

There is no such thing as high returns with low risk. Better to earn moderate returns than swing for the fences. If you decide to swing, remember, it can backfire and you can experience big losses. It is a common saying that “the higher the risk, the higher the returns, and vice versa”. Some investments entail what we call a level five investment risk; the risk that you can lose almost all your money. These investments are too risky for most people. One easy way to reduce investment risk is to diversify. By doing so you may still experience swings in investment value, however, you can reduce the risk of a complete loss due to bad timing or other unfortunate circumstances.

Know Your Investing Frequency

Automating your investment deposits consistently over a period of time is still the best way to save more and worry less. This helps the investor not to cede to the temptation of spending unnecessarily, and the laziness that comes with having to physically walk or drive to the financial advisor every month to make a deposit. Automating your investment deposits can thus be done via standing orders or direct debit with your regular bank, and that will save you a whole lot of time.

Conclusion

Take your financial immunity seriously in 2022 and start your immunity account today. Visit your financial services provider and ask them these questions. Compare their answers with these guidelines and be guided.