Financial Projections: Everything You Need To Know
Crises are the boom for financial projections. There are reasons for that. The bad news also creates uncertainty and fear. This also applies to the pandemic. Most people’s perception of risk is very different now than it was a year ago.
But right now it is important to keep your nerve. Because wrong decisions can be expensive and painful. They can affect your assets much more than fluctuations in exchange rates, costs or low interest rates. The reason for this: In all cost considerations, the human cost and its emotions are left out. With these protective measures in terms of financial knowledge, you can get yourself the first tools;
We all worry about the future. Especially in a crisis like now. Bad news is good for making money.
Good Financial Management Pays Off
For politicians as well as for companies. But at some point too much bad news and scare don’t go down so well. Especially if you are associated with massive restrictions on freedom. This can also be clearly established at the moment.
When it comes to money and assets, however, scaremongering still works very well. Better than any conspiracy. The reason is simple: financial losses work in the brain directly. The very prospect of loss makes us scared.
Predictability Of The Future
Predictability of the future and stock market forecasts. The predictability of the world is overestimated. People think that they could predict things that are unpredictable. Regardless of whether it is about the next stock market crash or the pandemic, these events cannot be predicted. The pandemic is currently showing us the limits of predictability very clearly. A customer recently said that maybe a little humility would do us good again.
The Difference: Risk And Uncertainty
The distinction between risk and uncertainty. Only known risks can be calculated – uncertainty cannot. The probability of winning at financial projections can be calculated precisely. However, the development of share prices or the exchange rates of different currencies cannot be foreseen.
This Is How You Protect Yourself Against Financial Forecasts
There are effective reasons to protect against forecast traps. It is important that you keep the risks in mind. When we advise clients on investing, the possible risks always play a major role. Even if the market has been going up for years, it can go down at any time. The other way around.
Put Your Own Risk Perception
There are also risks that lie outside of personal perception. That includes inflation. It is important that you know what inflation is doing with your money. How the value shrinks if you leave it in the overnight money account or savings book. To counter this, it’s best to have more income streams or backup options like gold investments.