STRESS, SOLVENCY AND SIMPLICITY

WE all suffer from anxiety and woes. Might there be a simple way to make at least some of our economic worries disappear? In this day and age, many things cause stress. By itself, that is neither good nor bad. You see, living with a modicum of stress encourages personal growth. However, too much unremitting stress can crush our souls and harm our bodies.

So, in the interests of assessing where you are on the personal stress spectrum, let’s have some fun, shall we?

On a scale of 0 to 100, decide what your general stress level is today.

Select 0 if you’re in a vegetative coma in the hospital, have no thoughts, are oblivious to the world, and unable to read this; pick any integer between 1 and 99, if you live in the real world and are taking this exercise seriously; and choose 100 only if you’re disarming a nuclear device, need to cut the red but not the green wire, and have suddenly developed extreme colour blindness.

Bad jokes aside, stress can sometimes be a silent killer. We all suffer from stress emanating from stressors embedded within various facets of life. We might be stressed from a health issue, a family emergency, a lack of money, or from any other reason this tough old world hurls at us. investing options, we all need an oasis of calm simplicity. It might well be that the pool at the centre of your coveted oasis should be filled not with liquid water but with liquid cash.

Has an economically-savvy friend of yours ever asked: “How liquid are you?”

When someone familiar with financial jargon says something like that, he or she isn’t interested in how many bottles of mineral water you have on your person or in your home. Liquidity in this instance means cash.

If you’re liquid, then you’re — I apologise for using more jargon — solvent.

When a person doesn’t have enough ready cash (or at least assets that can be rapidly turned to cash) to pay his bills, he’s deemed insolvent. And if you have some cash saved, you are by definition somewhat solvent, and if you have a lot of cash saved, you’re very solvent.

Having sufficient liquidity and being solvent is a good thing. So, you see, whether you’re one tiny fish in the vast ocean of the Malaysian rakyat or a wealthy, skilful institutional investor with billions under your control, staying solvent with sufficient liquidity is always wise. (On a separate note, but sticking to the theme of making things better both for one person and for all the rakyat, your importance as an individual casting one vital vote will soar to giddying heights on May 9. Cast it wisely.)

Just as countries must manage their finances responsibly, so too should regular members of the rakyat. If we manage our personal finances in such a way that we’re adequately invested for long-term growth that outpaces inflation while maintaining sufficient solvency through healthy cash savings, then our financial stresses arising from the stomach ulcer-triggering stressor of illiquidity will be manageable or might even vanish.

If you possess the necessary skill set, you should do well saving and investing on your own. Otherwise, wisdom, or at least guidance, from your personal unit trust consultant, relationship manager, private banker or financial planner may prove helpful.

As you assess the quality of their advice though, always ask how they’re personally remunerated. For yourself, be careful not to salt away so much of your finite stash of cash in low- or no-yielding liquid savings that you have little or nothing left to invest in more volatile, higher yielding asset classes that stand a fighting chance of eventually growing faster than your long run personal inflation rate. You see, you need that to happen if your goal is long-term wealth accumulation, in real, inflation-beating terms.

Nonetheless, do also stay persistently focused on maintaining sufficient cash savings to keep well at bay excessive internal — frankly perhaps even infernal — personal financial stress from insolvency.

© 2018 Rajen Devadason

Read his free articles at www.FreeCool Articles.com; he may be connected with on LinkedIn at https://www.linkedin.com/ in/rajendevadason, rajen@RajenDevadason.com and Twitter @RajenDevadason