How to survive this era of financial insecurity

Frances Cook shares some key moves to help you keep calm and stay afloat in choppy financial waters.

The money world has hit an identity crisis. One day, the US imposes tariffs around the world. Stock markets tank.

The next day tariffs are partially paused (except for on China), markets rally, the S&P 500 going up 9.52%, it's third biggest jump in a single day since World War II.

Oh but then markets are down again the next day, and actually, the bonds market is looking bad too, as well as the US dollar, and all the financial experts say that’s even worse.

Welcome to 2025, where geopolitics moves faster than your shares trading app can load.

So what do you do when it’s all getting a bit hairy out there? You make a plan. A plan that’s based on what you need, not what the headlines are screaming at you. Here are some key moves to help you keep calm in this era of financial insecurity.

One thing to understand about the business world, and therefore the sharemarket, is that it hates uncertainty.

Even bad news can be taken well, because it gives businesses the ability to plan, and deal with what’s coming.

But unexpectedly slapping on record high tariffs, followed by an equally sudden reversal a few days later, while still holding a threat of bringing those tariffs back? Well, that makes it pretty impossible to plan.

Kiwibank’s senior economist Mary Jo Vergara put it well when she told me “uncertainty leads to inaction, and inaction leads to no activity.”

She also warned this could derail our economic recovery if it spooks businesses into holding back on spending or hiring.

Which all sounds a bit scary. But bear in mind, if businesses can’t find certainty in geopolitics, they’ll simply look to create their own. If the next four years of a Trump presidency are going to be about wielding uncertainty, then businesses will simply start to plan for that instead.

We’re already seeing increasing calls from the business world for countries to build new trade relationships, outside of the US. Eventually, the abnormal will be normalised, and everyone will continue finding ways to do business with each other. They just might be in different ways than before.

Maybe create a routine where you check the headlines in the morning, then ignore them for the rest of the day, until it all settles down a bit. Stay informed without overloading yourself.

Just to add to the maelstrom, we’ve also got cuts to the Official Cash Rate (OCR), and further cuts forecast.

That's good news and bad news; bad news being that all of the other money news could hurt our economy, and maybe even push us further into recession. Good news being that could mean lower interest rates, including lower mortgage rates. Yay, I guess?

Finance company Squirrel’s David Cunningham says we’re now entering a period of sub-5% fixed mortgage rates. Where they might go from here is anyone’s guess, but he does make the point that that’s a decent rate, and worth taking advantage of while you can.

He recommends spreading your risk — fixing, say, part of your mortgage for one year, part for two, part for three. That way, you're not exposed if rates move sharply in either direction.

This is also your window to make progress. Lower interest rates mean lower repayments, true. But if you’ve been able to handle your repayments under a higher interest rate, consider keeping your repayments at that same level, using the lower interest rate to chip away at your mortgate principal and decrease the amount you owe on your house at a faster rate.

Or you could try a compromise, pocketing 50% of the saved rate, and keeping the other 50% as an extra mortgage payment. Even a little extra now could see you mortgage-free years earlier.

When the headlines scream "crisis", the temptation is to react fast. Stay ahead of it, beat the crowd.

But you’re already in the crowd. By the time it’s hit the headlines, you’re not going to be ahead of it. It’s too late.

Instead of playing out some kind of kneejerk reaction, use the "crisis" to take a moment to reassess your goals, and what you’re aiming for.

Are you still hoping to buy a house in five years? Retire? Start a business? Have you set up a plan that you’re hoping will get you there?

You money should work for you in a way that factors in the unexpected. That’s why we say that investment money should be for money you don’t need for five-to-ten years.

That’s why your KiwiSaver should on be in a conservative fund if you’re planning to use it in the next year or two.

If your goals are still a few years away, this probably doesn’t impact them. Just use it as a little reminder of what matters to you. Fear doesn’t need to derail a long-term strategy. Your goals probably haven’t changed. Just the noise around them has.

Anyone who’s applied for a job lately can tell you that it’s rough out there. The bigger problem with a lot of the above money news is that it could hit business confidence, which would make the job market even worse.

The hope right now is that we’ll get an improvement in the second half of 2025.

Until then, look for ways to make yourself an unbeatable hire.

If you currently have a job, volunteer for projects where you’ll learn new skills that your company values. Get involved in the projects that are obviously a top priority for them.

Upskill, or take a course. There are free courses to be found, with places such as Open Polytechnic having a number of free courses, or even Coursera offering free training from universities around the world.

Think about the skills that your industry values right now, and make sure you’re up to date with it.

If there’s an opportunity to build up some side income, go for it, as that can take off some financial pressure without needing a total career overhaul.

Protecting your income is an underrated investment in itself. Don’t overlook it.

The investing world often talks about the need to embrace risk if you want to make more money.

Except the way that they use the word risk is not the same as the way the rest of us do. They often mean “volatility”, which means simply, that things go up and down more.

This means that your KiwiSaver balance heading down at a time like this is actually a feature, not a bug. It’s part of how you make money in the long run. But you do have to hold your nerve through it.

Investing into one, or two, companies at a time like this can go very wrong. Individual companies could indeed collapse, leaving you with nothing. But funds, such as KiwiSaver, are usually investing into hundreds of companies. Some of them invest into thousands.

They’re basically investing into the economy itself. And the economy can have down times, but it picks itself up, dusts itself off, and soldiers on eventually.

When you buy when values are down like this, you’re getting more for your money. And then you’re ready for when the economy bounces back, businesses are worth more, and your investment increases in value.

Funds are key to not just surviving, but actually doing well from a time like this. Your KiwiSaver is a perfect example of it.

Also, AMP’s Aaron Klee pointed out most KiwiSaver members are in diversified funds. So even though global shares have taken a hit, bonds, infrastructure, and cash will help soften the blow.

“The event is usually different every time – we’ve had Y2K, the GFC, the pandemic, and now tariff mania. But in every instance, the market figures it out and moves forward.”

His key advice? Stick with your long-term plan. “The worst-performing investors are often the ones who make emotionally-driven moves. Trying to pick individual companies or time market bounces is where people usually trip up.”

Your own money moves should be based on what you personally need, and not what’s happening in the markets on any given day.

Successful investing is a long-term play. Money in the sharemarket should be able to stay there for five-to-ten years at least. If you need it back before then, it shouldn’t be in the market in the first place. But you don’t need to make changes based on what’s going on week to week.

The information in this column is general in nature and should not be taken as personalised financial advice.