What is your Margin of Safety - Personal Finance Lessons

What is your Margin of Safety - Personal Finance Lessons

 The so-called 'Margin of Safety' is not  limited to stocks traded on the Stock Exchange. We need Safety and precautionary measures in the events we encounter on a regular day basis. As we approach Health and Economic issues, the question arises as to whether we have done this before.

We have been hearing lines like 'Small drops make an Ocean', 'Prevention is better than Cure' for a long time. But in realty and practice, we fail to implement it and then get into trouble. Examine for yourself what your current status in the Following questions...

  • If you or someone in your family has an unexpected Health or Financial problem, what is your immediate solution you have to overcome it ?
  • If you are experiencing loss of a Job, what is your next Plan you have ?
  • What is your Emergency Fund ?
  • What is your 'All Time Prevention mode' Strategy ? 

We have been saving in a single instrument for a long time and considering it as a Safe Investment. Inflation is Rising. You may not reached the amount you expected and achieve your Financial Goals. Do you have any alternative plans ?

Insurance Plans like Term, Health and Accident cover are usually the shield in front of us. We can also take out insurance for our Fixed Assets. We can save for Financial goals and for the essential needs that arise as befits our age. You can invest to get returns beyond Inflation.

The investment opportunities before us are mostly Small savings scheme like Deposits and other available investment avenues are Realty, Stocks, Debt Securities, Commodities and Cash. It is noteworthy that Speculative things like Day Trading or Virtual Currency are not considered as investments. 

Asset Allocation and Diversification are necessary to beat the Inflation and reduce the Risk on investments. This would help to get better returns in the Long run. 

Now, what is the Margin of Safety for you ?

Kindly share your views / comments with a smile :)

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