• Article
• 2024-07-13

Prepare for Asset Devaluation in Next 2 Years: 4 Things to Avoid

In today's society, the uncertainty of the global economic environment is increasing day by day, and asset devaluation has become a common phenomenon.

Whether it's second-hand items in the home or stocks in an investment portfolio, they can lose value over time or for other reasons.

Faced with such a situation, many people are worried about their financial situation, fearing that the shrinkage of wealth will have a negative impact on their standard of living.

To this end, experts have given some practical advice to help us better avoid risks in the next two years.

Here are four key points summarized by four experts, hoping to be of help to you.

In the modern financial field, "leverage" is a well-known term, which refers to controlling a larger scale of investment with less capital.

By using the leverage effect, we can multiply the initial investment several times, thereby achieving multiple increases in returns.

However, this amplification effect is like a double-edged sword - both gains and losses will increase accordingly.

For example, if you use leveraged investment, even if the initial principal is only 100,000 yuan, you may control assets up to 1 million yuan.

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If the investment is successful, the return is naturally considerable; but once the investment fails, the loss will also increase several times.

Especially in the current uncertain economic environment, many assets are facing the pressure of devaluation.

Under such circumstances, if you choose to use a high leverage strategy, it is actually increasing your own risk level.

For example, mortgage loans, car loans and other borrowing behaviors are all forms of leverage.

When you borrow money to buy a house or a car, you are actually using the leverage effect.

In the case of healthy economic conditions and stable salary sources, using this financial leverage may be a safe choice.

However, in the case of economic recession, reduced income or unemployment, those huge debts will become a heavy burden.

Therefore, in such a context, we need to reasonably control the level of debt and avoid excessive borrowing.

This seems simple, but it requires strong self-discipline and a long-term perspective.

Before deciding to invest, please make a comprehensive research and evaluation to ensure that you have enough ability to bear the potential loss risk.

In addition, you should also master the skills of diversified investment, allocate funds to different investment channels, and thus reduce the overall risk.

Even if a single investment behavior suffers a setback, it will not have a far-reaching impact on daily life.

When the market is turbulent, the phenomenon of asset devaluation is common.

Many investors see their personal wealth continue to decrease, and naturally feel worried and uneasy.

Driven by this mentality, some investors may decide to sell in a hurry, trying to reduce losses.

However, such actions usually have the opposite effect and may even further increase the loss.

During market fluctuations, asset prices may not accurately reflect their intrinsic value, and market sentiment often dominates, leading to sharp price fluctuations in the short term.

If you sell blindly with the crowd at this moment, you are likely to sell at the lowest price, and thus suffer more serious losses.

In the face of such situations, investors should remain calm and examine the underlying value of the assets they hold with logical thinking, and judge whether they have been misjudged by the market.

In the long run, the value of high-quality assets will eventually emerge.

Therefore, for those investment choices with a solid foundation, such as shares of stable development companies or real estate with superior geographical locations, investors might as well change their thinking and choose a long-term investment strategy.

This is not to let go and not care, but to have confidence in the investments held on the basis of in-depth analysis, and wait for the market to return to rationality.

The road to entrepreneurship is full of thorns, not only requiring passion and dreams, but also comprehensive abilities and resource support.

Especially in the current complex and changeable economic situation, starting a business rashly needs to be treated with caution.

Some people, because they encounter setbacks in the workplace or are dissatisfied with their current income, decide to resign and start a business on impulse, trying to create a new world.

However, starting your own business is by no means easy, it tests a person's business management talents, market promotion strategies, financial planning understanding and many other areas.

For example, one of my friends, who had worked in a company for many years, decided to leave his job and open a coffee shop due to the huge work pressure and unsatisfactory salary.

At first, he thought that running a coffee shop was romantic and free, but he did not conduct sufficient market research, nor did he consider the high rent, labor costs and other issues.

In the end, the coffee shop has been in a slump since its opening, and finally had to close down.

This failed attempt not only exhausted all his savings, but also put him under a huge debt pressure.

Before starting a business, it is necessary to conduct in-depth and meticulous market research, understand the target customer group, competitive situation and potential risks and other information.

Only on the basis of careful planning can the success rate of starting a business be increased.

Especially in times of economic fluctuations, it is even more necessary to plan carefully to avoid repeating the same mistakes.

As the risk of wealth value decline gradually increases, people's property may decrease imperceptibly.

Although insurance itself cannot directly increase wealth, it can provide necessary protection at critical moments.

Whether it is health problems, accidents, or theft and damage to property at home, insurance can alleviate your economic pressure to a certain extent.

Unfortunately, many people often ignore the importance of insurance when their lives are going well, thinking that buying insurance is a waste.

It is not until they encounter sudden events that they realize the value of insurance.

Therefore, we need to design a reasonable protection plan according to our own specific situation.

People who are the backbone of the family should consider buying life insurance to provide safety for their families; those who often travel or face greater work pressure should pay attention to health insurance; families with valuable property should also be equipped with corresponding property insurance to prevent accidents.

Buying insurance is not a one-time deal, as the needs for protection vary at different stages of life.

It is undoubtedly a wise decision to review and upgrade your insurance plan regularly to ensure that it continues to meet your needs.

Although insurance will not directly bring wealth appreciation, it can save you a lot of expenses at critical moments, allowing you and your family to enjoy a more secure life.

Looking forward to the next two years, the global economy will still face many uncertain factors, and the risk of asset devaluation cannot be underestimated.

The four suggestions proposed in this article are aimed at helping everyone to keep a clear mind and act cautiously during such a special period.

Only in this way can we effectively cope with the challenges brought by asset devaluation, protect the safety of personal and family wealth, and thus ensure the stability and happiness of life.