Finding the causes of financial crisis could be a lifelong search because I know there are many factors that will impact what happens in an economy. I am not an economist however I do have my own thoughts, as I am sure you do when it comes to the causes of financial crisis. So in today’s post let’s ignore what the governments are saying and get real. Because the government and major companies like the banks and institutions are going to have their own spin on it and not want to get down to the truth of the problem.
I am not sure this is going to win me any friends but hey, you only live once and today seems like a good day to voice my opinion. Also I may be able to get some ideas out there that will help you when the next financial crisis happens. It is my belief that it is going to happen again because nothing has really changed, and until things do, we will keep going in a never ending spiral.
Latest financial crisis is an unpleasant event for global economic activity. However history is full of financial crisis and economic turmoil. The main question in a financial crisis is how to handle our money in such an economic slowdown with prudence, care and effectiveness. In the following lines we present some money ideas from http://buff.ly/1ceZyS6.
Buyer’s power is our first concept. Do the words bargains, deals, discounts, offer seem familiar to you? Buyer’s power is the ability a buyer or consumer has in terms of determining the final price of any product or service. Fixed prices are put aside in any financial crisis and the idea of bargain becomes a natural habit. In an era of financial trouble with liquidity constraints where cash is the king any smart business owner will be more than happy if you give a great incentive to pay for cash in exchange of a severe discount. And by cash we do not mean payment via credit card but simply payment with notes. The concept of buyer’s power is often associated only with seasonal offers such as Christmas. This is a mistake simply because you just have to do one thing, which is ask for a discount or bargain-shopping in everyday life from cheap goods to more expensive products. A classical example is the offers that almost all auto-makers are doing. If they can make you a brave discount of a couple of thousands dollars even without asking for it, then don’t you think that at your local mall any store will be willing to save you some money shopping or buy more goods with the same amount of money? Try it and ask for discounts daily. With this practice you will save a few or more money depending on your personal shopping style.
Personal finance is very important especially in modern times where financial needs, styles and habits are changing. The main cause of this recent financial crisis was the broken link between risk management and anticipated or expected return. Inadequate supervising measures caused a domino of economic slowdown in global economies. So an education about personal finance is crucial and could be accompanied with prioritizing needs from absolute necessary to possibly lavish ones. A priority list that has all our income sources and not only our current but also the possible expenses is very practical when a decision on how to spend our limited is reached. The happy even of a child birth in following month could possibly postpone definitely the new car purchase. A conservative approach in spending money is most appropriate in this money and business crisis underlined by the fact that we do not know and cannot guess the duration of the economic slowdown. Loans can be renegotiated with financial institutions as lower interest rates make money cheaper and if you can afford to prepay in advance any business or mortgage loan then a great boost in liquidity constraint can happen. It is now the time to fix your personal finance balance sheet removing troubled assets and placing more efficient money making sources.
Investing in latest days seems like a bad joke to many people. But investing is different than speculation. Most investment opportunities appear in extreme times where fear, anxiety and despair are intense like the last few months. Many stocks have lost a significant percentage of their values and seem real bargains at current levels. But investing simply because cheap is attractive is not enough. Investing is not simple. And often cheap gets cheaper. Instead of investing blindly and speculating on assumptions that a 5 dollar stock that has lost almost 90% of its value must be cheap although it could go to 2 dollars in a matter of weeks or days and then be a really bargain try to educate yourself and read behind the lines, the boring balance sheet and financial reports of companies that have strong cash flow. We mentioned before that cash is king. Same rule applies to stock investing. Companies with solid balance sheet and low or moderate debt with sustainable cash flow will be able to survive the financial restriction. When people prioritize and restructure their spending lifestyle what are safe companies and not safe bets because a bet is mere speculation. Have the odds with your favor. Picking tops or bottoms is very dangerous but defining an investment plan with quality versus quantity orientation and with a time horizon of a couple of years does not seem totally out of date or irrational. Make a detailed research and analysis. One last thought. Companies on front page of magazines may not be a good example of buying prospects because many people will push artificially their stock prices up. And one fundamental investment rule is buy low and sell high. Differentiate yourself from the speculators herd.
Latest financial crisis as it seems is severe and will be present for an unknown time. Best practice to face it is to educate ourselves and think for practical ideas outside the box.