5 Investment Principles to Use During an Election Period
Okoro was busy talking to himself, murmuring in his room after looking at his investment portfolio and reviewing the current situation in the country. What do I do now? Election is coming up in 3 months – will the incumbent be retained, or will a new president be voted into power? There is so much uncertainty. Where do I keep the funds I intend to invest, and where do I transfer my existing investment portfolio to maximize returns? Okoro was disturbed.
Just before the last election, he withdrew his investments from the stock market only to hear that there was a growth of 12.5% over a 3-day period immediately after the announcement that a new president was voted into power as well as the peaceful transition that followed.
Okoro wants to know how he can manage the situation this time to get the best value from his investment portfolio and ensure he never gets broke?
Hmmm…. Let’s try to provide some solution to Okoro’s dilemma……
Election comes every 4 years but we have financial goals to achieve regardless of who wins- incumbent continues with the existing policies or a new winner emerges and promotes new policies to better the achievement of the previous government. These actions are not expected to influence your investment goals if you always apply the five investment principles highlighted below;
- Be clear on your financial goals- Why are you keeping the funds away? How long are you looking at? Apply the SMART acronym to your goals- ensure that your goal is Specific, Measurable, Achievable, Realistic and Time Bound.
- Know your financial status- What is your Net worth? Deduct your liabilities (what takes money away from you) from your assets (what makes money for you). Measure your cash flow and expenses with the help of a Budget. All of these would help you create a convenient savings plan towards achieving your financial goals.
- There are so many goals running through your mind. Therefore, it is required that we split our goals into 3 different categories namely: Short term (those you want to achieve in 2 years), medium term (those you want to achieve between 2 to 10 years) and long term (those you want to achieve above 10 years).
- Implement your strategies- You need to understand that the different financial instrument available are suitable for specific category of goals identified above. For instance, short term instruments are Treasury bills, Money Market Fund. Medium Term are Balanced mutual fund while long term are Stocks and real estate. You might need a Financial Advisor to help out.
- Review your investment- Align your investment plan with new policies to ensure you are making the most value for yourself. Always review your short-term investment every 3 months, medium term goals every 6 months, Long term goals annually.
These are tested and trusted principles that will provide the hedge required on your investment portfolio at all times regardless of what changes in the economy.
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