What is Turbulence in Financial Management? Turbulence is disruption to your current plan (Example: during economy downturn), which may cause you to start worrying. It is indeed great that you are aware of the condition and start worrying. So, what should you do?
Normally during this time, you will see and hear that many pulling out from their investment as the investment is making lost.
Whenever we come to this situation, I always recall a story shared by Mr Appelles Poh many years ago:
Airplane in turbulence
A: Assuming you are on a plane and suddenly the plane going through turbulence, what will the crew or pilot ask you to do
B: Get back to our seat and fasten seat belt.
A: Would you follow the instruction?
B: OF COURSE!
A: What if there is a passenger who doesn’t follow instruction and run into the cockpit to take over the role of the pilot? Would you do that or allow that?
B: NO! NEVER! It is best left to the pilot.
A: Would you jump off the plane? Since it is going through turbulence?
B: NO! The chance is better to stay on the plane.
A: Finally, if the pilot says the plane will crash, would you jump with or without parachute?
B: Of course with parachute.
After going through this story, we can easily relate:
1. Discuss with your pilot for your financial plan.
2. Decide if it is still on track? Do you need a alternative plan? Or the disruption is just temporary and we shall navigate it through?
3. If you really need to terminate the plan, what is the risk mitigation plan (your parachute)?