Prepare For The Financial Risks of 2018
This blog post originally appeared on Luca Fury's website.
Every single year poses its own set of potential risks to your pocketbook. Truthfully, no two years are exactly alike. You always need to look ahead to know what obstacles potentially stand in your way. There are a number of them in 2018, perhaps even more than in recent years.
The politics in the United States are dicey enough to begin with before you even start to factor in other countries as well. There is the potential for a government shutdown to start off the year in the United States, but that just gets us kicked off.
National elections are slated to take place in Italy, Brazil, and Mexico. There are still ongoing negotiations related to the British exit of the European Union (Brexit). We also have continuing crisis situations in Yemen and Venezuela just to name a few. Any single event could play a factor in how the market shapes up.
Interest Rate Risks
A lot of investors are still not giving enough deference to the idea that interest rates may climb. The market is priced in such a way right now that it seems like a lot of investors fully expect the low interest rate trend to continue forever. The rates have already been incredibly low for a long period of time at this point, so perhaps it is time for them to start to climb again. If the Federal Reserve pushes too hard on that gas pedal, they could push us into a recession.
There are crisis situations brewing in Yemen and elsewhere as already mentioned, but those are microscopic issues compared to what could happen if there is a geopolitical incident somewhere in the world. It is entirely possible that a conflict could occur in a place like North Korea, which would really rattle the global economy. Of course, no one wants to see such a thing occur, but we could be headed in that direction, particularly if an accident of some kind takes place.
Already, we have seen soldiers from the North defecting to South Korea at an alarming rate. It is difficult to say with certainty what is happening in North Korea, but if things spill over, the subsequent events could have an impact on your wallet.
These are a few of the types of things that you need to concern yourself with for the new year. Seeing as our plate is full of potential looming disasters, it would be wise of you to prepare yourself for all outcomes.