An adrenaline junkie knows how exhilarating skydiving is. It is one of a kind experience. There’s thrill and excitement when you first board the place, not knowing what to expect. Your instructor gives you a green flag. You approach the door of the plan, and your blood immediately starts pumping up at sprinting speed. At the hum of the engine, your instructor shouts jump and before you could comprehend you’re swaying 200 kilometers per hour enjoying the moment. Your instructor pulls the cord. The parachute opens up, and suddenly everything gets calmer. You glide to the earth; everything becomes more peaceful, and you’re still in awe of your expedition. You reminisce it with a beaming smile and are already thinking to do it again.
But imagine, Jumping off the place and free falling from 2000 feet. Your instructor pulls the cord and realizes the parachute isn’t working. Your instructor looks alarmed. He opens the one kept in reserve, and that too is malfunctioned. He’s in a full panic mode, and you’re clueless about what is happening.
What emotions you’ll carry if you know, you’re dying in ten seconds, and it is inevitable. It goes without a saying that you’ll be shocked, horrified, and helpless.
Now let me come straight to the point. We enjoy the experience of sky diving because we know we have two parachutes in reserve. The moment, we realize about the failed parachute, the fantastic experience transforms into a nightmare.
The financial parachutes
Likewise, you need parachutes when you invest. Why? Because the stock market is volatile and you ought to always remain “parachute” ready. If the stock market freefalls, the parachutes are there, so you don’t need to liquidate your Malaysian stock picks.
You may wonder, what are these parachutes?
Parachute number 1: Save
The first parachute without which you’ll be a handicap in the Malaysian stock picks is saving.
The primary parachute you want is to have at the least six months’of financial savings. If you have a significant loss while investing, you may cover your household charges for at the least the subsequent six months even as you get things again on course.
You don’t need to be caught in a scenario wherein you want the cash, and also you’re pressured to sell your investments at a loss due to the fact you didn’t shop sufficient for a rainy day.
Financial parachutes are necessary for saving you from a doomsday. They make sure you’re covered from illness, permanent disability, hospitalization, and so on. As an investor, it will be overwhelming for you to get carried away with the wave. But you need to know when to invest in the Malaysian stock picks and when to pull off your leg.