Evergreen investment and financial management strategies are those logical, tested and proven ways of managing your investments and business as whole. The good thing with evergreen investment and financial risk management is that you can easily apply the techniques using any traditional accounting software of your choice or by using any cloud accounting vendor of your choice.
I will discuss these strategies under two different headings for clarity sake starting with evergreen investment strategies and then move to evergreen financial risk management strategy.
Evergreen Investment Strategy
Proper asset management: your assets are your main investment and need to be properly managed. This can be your tangible asset or intangible assets, including human capital assets. You can never go wrong by preparing and maintain complete asset register. A fundamental principle of investment is to ensure the safety of your investment and the first step in doing this is to keep accurate record of your assets.
Sensibly diversifying your Investment: am sure you must have heard about the phrase ‘niche investment or niche marketing’. Too many people have made investment mistakes by putting all their eggs in one basket all in the name of implementing niche strategy. For clarification, I will provide my definition of diversification of investment and niche investment- many will not agree with this but it working
Meaning of investment diversification: investment diversification means spreading your resources across different but manageable related areas. You allocate your resources within a niche in such a way that negative returns from one area will significantly affection the going concern of your business. A building company for example will be losing some revenues by focusing on just flooring and ignoring things like roofing, painting, decoration, etc.
Meaning of niche investment strategy: niche investment on the other hand is a philosophy of identifying a market and serving all its needs. Your company will be so distracted if you for example try to serve the auto market and housing industry.
Evergreen Financial Risk Management
Financial risk management is a collection of economic practices that will add value to a company while protecting the company’s assets at the same time. Financial engineers developed instruments that help their company or client identify, assess, manage, limit and report risks.
The problem here is that things change so quickly nowadays that it takes hard work to follow trends in finance. But, not all of the traditional financial risk management are outdated. Some of them are in fact evergreen and that is the subject of this section of this article.
Corporate governance: corporate governance simply means how organization’s resources are managed. No matter how sophisticated a system is, if there is no order and sanity, nothing will be achieved. So the first evergreen investment and financial risk management is to have a sound corporate governance.
Currency risk exposure management: irrespective of the time we are working in, the management of foreign currency risk exposure will always be important. Advancement in technology will only modify the process but the principles will remain the same.