If everything is patently about to change in a wild way and we must not try and second guess this, then what are we to do? Freeze on the spot? Turn full circle? Stick to our guns?
In part one of this series we suggested that a good place to start is to be attentive to the arising AI-led situation that is evolving and to realise, quickly, that this is changing everything.
From that base, then we can understand that things in the near future are going to be very different, very fast.
However, just being or aware or attentive must be backed by some form of approach to dealing with this, and in the context of our finances, we recommend that we need to become more flexible in how we deal with things.
Despite all the movement in the past couple of decades, the financial crash, Brexit, Pandemic and the war in Ukraine, the backdrop to financial planning has been relatively stable.
Most of the big picture aspects which have dramatic effects on financial decision making have remained consistent, within boundaries.
For instance, major markets have had their ups and downs, but shares have continued to produce returns, government bonds have been reliable, property prices have generally gone up, life expectancy has improved a little in the past 15 years and so on. The job market has been good, albeit with some fundamental challenges (e.g. the boom in early retirement as a consequence of the pandemic). There have been systemic problems but these have been dealt with, mainly through government interventions.
Where there have been problems or challenges, these have been, what we might loosely call “fundamental “ ones, and there have been mechanisms to meet these, and these mechanisms are based on tried and tested methods.
Today, it seems entirely possible, if not likely, that the fundamentals are going to shift, that we are entering a new era, unprecedented in nature. In some ways, this presents potential new risks, which we may not be familiar with, and in part three we hinted at this with the astonishing prediction that we maybe on the cusp of a longevity boom, the like of which has never been seen before.
We will explore further such seismic shifts in the next parts of this series, but for the moment, we want to focus on our top down approach, and this is where flexibility comes in.
It makes no sense to try and pinpoint anything ahead of us and apply precision to it, the argument being that we simply don’t know for sure what is coming, just that something major is coming.
So, we stick to our guns, but take out insurance, in the form of an approach which says we need to keep coming back to the table and reviewing what our position is, what are plans are, and how is this shaping up against the unravelling position?
Whereas, in the past, we may have reviewed things every now and then, and largely, just stuck to the conventional course, now we need to be more respectful, that we might need to find a new course, if some of the more astonishing predictions start to manifest.
The strategy has to be twofold, pay attention and be flexible.
In the next three parts of this series we will turn to more specific aspects of the evolving situation and look at some detailed ramifications for the money world, which are likely to impact your decision making and plans, starting with the stock markets.