In the previous part (Part 1 of our story, we ventured through the forest of flashy headlines and discovered the true nature of market corrections. In this Part 2, let me share some wisdom on weathering financial storms, and on equipping ourselves with the tools needed for the journey ahead. Together, we’ll learn to embrace the ebbs and flows of investing, not with anxiety, but with the calm certainty that comes from understanding and preparedness. Join me, as we continue our quest for a HappyRich life, one thoughtful step at a time.

Before we step into the heart of our discussion, let’s pause for a moment. It’s important to approach what comes next with a mindset ready for growth and change. The points we’re about to explore are more than just markers on a chart; they are time-tested beacons, long-standing truths that you may already know but perhaps have not yet fully integrated into your financial ethos. Think of them as a series of lanterns illuminating our path—each one casting light on a principle or a strategy that can lead us toward financial serenity. Now, let’s move forward, gently but confidently, as we discover the guiding principles that will help us navigate the financial journey ahead.

1. Never ever invest money that you require in a day or a month/quarter or even a year (or two) in the stock market. This effectively means all this money is simply long-term. You are not dependent on this for day-to-day expenses or any lifestyle expense.

2. Ensure you’ve set aside what I like to call a ‘Lifestyle Reserve’—it’s your financial safety net for those times when the economy takes a dip. Think of it as your personal buffer against uncertainty, tailored to your unique financial picture: your income stream, the life you lead, the debts you carry, and your overall appetite for risk. It’s your stash of funds that could cover your needs for anywhere between 6 to 24 months, customized to support you and your loved ones when you need it most.

For your ‘Lifestyle Reserve,’ consider not just the amount but also the accessibility. This fund should be in a form that allows for immediate withdrawal without significant penalties—think savings accounts or liquid funds. It’s not just a pool of money; it’s peace of mind, ensuring that life’s unexpected turns don’t turn into financial freefalls. Regularly review and adjust this reserve in line with life changes such as a new home, a growing family, or a change in career. It’s a living part of your financial plan that should evolve as you do.

3. Additionally, I advocate for establishing what I refer to as your ‘Sleep Well At Night Reserve.’ This goes a step beyond your Lifestyle Reserve. It’s the assurance that you have enough liquid assets that stand firm even when the stock market is on shaky ground. These are funds you can count on for a prolonged period, say 3 to 5 years, if necessary. It’s about having that extra layer of financial security that lets you sleep peacefully, knowing you’re prepared for extended market lows.”

As for your ‘Sleep Well At Night Reserve,’ it’s a testament to prudent financial life planning. Beyond just liquidity, this reserve is about strategic allocation. While you can keep this in savings accounts and/or liquid funds, you can also diversify into assets such as conservative short term fixed income (debt) funds that offer stability independent of the stock market’s ups and downs.

Think of it as your financial anchor—keeping your overall portfolio steady in turbulent waters. This reserve is not about growth; it’s about preservation of capital and ease of mind. Regularly assess this reserve to ensure it aligns with the current economic climate and your long-term financial goals.

Incorporating these reserves is a proactive step towards a comprehensive, resilient financial strategy.

4. Get the Care of a World Class Real Financial Professional to come between you and your worst impulses or behaviour.