©Robert Kiyosaki
If you follow the stock market, you’re probably aware of a phenomenon known as “volatility,” in which securities fluctuate widely from day to day. This constant change naturally makes participants nervous.
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As financial market forecasts become increasingly volatile, entrepreneur and author of Rich Dad Poor Dad Robert Kiyosaki, on an episode of his show Rich Dad Radio Show, takes stock of market volatility. Here are three ways to prepare.
Here, we take a closer look at Kiyosaki’s advice on how to prepare your investments for volatile markets.
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educate yourself
Kiyosaki began by emphasizing the importance of education, especially in times of uncertainty when emotional (and potentially poor) decision-making is more likely.
He also warned against giving money to financial planners to do work for you. Not only are others less capable of determining your personal goals, but you also learn nothing in the process.
Instead, find a mentor and don’t be afraid to make mistakes along the way. The more experience you have, the less emotional you will be in your financial decisions.
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Positioning through methods such as hedging
Kiyosaki says holding a diversified portfolio of stocks, bonds and mutual funds over the long term can be too commonplace advice. Instead, it encouraged positioning using techniques such as hedging when it doesn’t matter whether the market goes up or down. All that matters is your position.
This method of maximizing profits and minimizing losses relies on a change in context, where the words “debt” and “market crash” are not necessarily bad things.
Invest in companies that appear to be profitable
Be safe when investing during periods of market volatility. According to guest and author Nomi Prince, “Small businesses are the backbone of America,” and many businesses are figuring out how to cut out bureaucracy and middlemen to actually generate cash flow.
For example, road construction companies and concrete waste removal companies generate profits because there are fewer companies doing this type of work. Therefore, demand is always high and fluctuations are definitely low.
Find and invest in companies that contribute to productive and measurable growth.
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Keep these tips from Kiyosaki in mind and you’ll be well on your way to weathering the next stock market storm.
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This article originally appeared on GOBankingRates.com: Robert Kiyosaki: 3 ways to prepare for market volatility
