30 Oct THE FUTURE OF FINANCE AND BANKING
The future of finance and banking lies in learning to deal with uncertainty. Keep in mind: Building and maintaining a strong financial portfolio takes hard work and effort, even in the best of times. In addition to making sure it’s adequately funded and well-diversified, you’ve also got to plan for market uncertainties and disruptions. The best way to do so: Be aware of sources of potential change and put a flexible investment strategy in place that allows you to adjust your approach in time with changing business environments. Following, you’ll find a guide to several factors you’ll want to keep in mind that can impact portfolio growth and performance. The more you account for them, the more successful your efforts to establish a blueprint for financial success will be.
Uncertainty in the Market
COVID-19 and coronavirus have thrown a spanner into the works for entire segments of the economy – no one can predict exactly what the future will hold, or when businesses will bounce back to previous levels of growth and opportunity. Likewise, keep in mind tax reforms’ ongoing impact on the economy as a whole: Critics are torn as to whether they’ll spur growth or prompt cutbacks, and – depending on industry – just how deeply they’ll impact organizations in various fields. Some say a massive influx of business investment in America can be expected, while others such as The Brookings Institution feel that reforms will provide brief short-term gains, yet have little long-term effect on overall gross domestic product (GDP). To protect your portfolio against possible fluctuations in the economy – COVID-19-related or otherwise – stay attuned to breaking news and developments, and spread risk across diversified investments, including assets of various kinds situated in myriad geographic locales.
New Technologies and Disruptions
Thanks to exponential advances in communications and technology, enterprises in every field from media to manufacturing are undergoing massive disruption and reorganization. Likewise, the COVID-19 pandemic has accelerated the pace of digital disruption. Analytics tools, automation, Internet of Things (IoT) devices, and robotics are just a few of dozens of new developments currently transforming fields such as marketing, research, consumer products, and healthcare at an unprecedented pace. Before investing, consider how these technologies may upend investments you’ve made in myriad sectors. (Ex: Digital and online growth are rapidly coming at the expense of traditional retail vendors, while self-driving vehicles may soon revolutionize shipping and transportation.) Taking the time to read up on and research new developments can help you predict coming market shifts.
Adjusting for Age and Living Situations
Few of us know for certain where our lives and fortunes will take us, even in the near-term future. Keeping this in mind, it’s vital to anticipate and plan for changes in situation as much as possible before changes hit because financial needs can change frequently. Case in point: A single Millennial with no dependents’ needs can differ greatly from that of a thirty-something with a spouse and children or Baby Boomer who’s preparing to take care of aging parents. Retirement and emergency savings should be moving targets that change as you age, says Bankrate, noting that housing, healthcare, food, insurance, transportation, and utilities are just a few expenses you’ll need to account for when planning an investment strategy. As you go about determining financial needs, experts not only advise planning for each life stage, but asking yourself some important questions as well – including whether or not others will be financially dependent on you. It’s crucial to consider them as, according to the Employee Benefit Research Institute, only 20% of people feel very confident they’ll enjoy a comfortable retirement.
While no one can predict the future with 100% accuracy, you can be sure that uncertainty is the only certain. Taking time to plan for it up-front, monitor breaking trends and developments, and adjust investment strategies in tune with changing markets is crucial to staying ahead of the curve. The more prepared you are for coming shifts in trends, tax reforms, and technology before they hit? The better able to future-proof yourself that you will be.