Not many more signs are needed to weigh that the economy is not doing well at all. To the rising inflation in recent months, energy prices, the Ukrainian War or the fall that the stock markets or cryptocurrencies have had, it seems that there are few things that can be added. But, as if that were not enough, Bill Gates, little given to panic, also believes that things are not looking good.
He told the show that he believes factors such as the war in Ukraine and the economic fallout from the pandemic make a “strong case” that the world will see an economic slowdown in the near future.
“It adds to the pandemic, where government debt levels were already very, very high, and there were already problems in the supply chain,” Gates said. “It is likely to accelerate inflationary problems in rich world economies, forcing interest rates to rise and eventually causing an economic slowdown.”
Gates added that countries’ efforts to curb rising inflation by raising interest rates is another related factor that “will end up causing an economic slowdown.” His comments were echoed by world leaders such as US Treasury Secretary Janet Yellen, who said in April that Russia’s attacks on Ukraine will have “enormous economic repercussions for the world,” she argues.
Gates’ top tip for overcoming financial complications: Prepare an emergency fund
With all this in view, the advice that, throughout his career, Gates has given to overcome difficult economic times, such as the one that may be yet to come, is also appropriate.
Despite the fact that when he ran Microsoft it would surely have cost him nothing to finance himself if he had gone through some difficult times, Gates displayed a practice from a young age that he applied to both his personal and professional life: having enough funds to maintain his standard of living and your business expenses for 12 months. .
But “investing like an optimist”
Sometimes Gates acknowledged that this is why he erred on caution, but that he prefers that situation to a more risky one.
“I always had to be careful that we didn’t hire too many people,” he said in a 2017 television interview. “I always worried because the people who worked for me were older than me and had children, and I always thought: ‘What if we don’t get paid? Will I be able to make the payroll?’
For Gates, optimism and pessimism in finance go hand in hand. What Gates understands is that “you can only be optimistic in the long term if you are pessimistic enough to survive in the short term.”
The best way to apply this for most people is to save like a pessimist and invest like an optimist, according to Gates.
Saving like a pessimist means recognizing that wild swings can come at any time. Hence Gates’ idea of always having a good cheap mattress on hand. The last year and a half with a pandemic that has disrupted thousands of businesses seems to prove him right.
But Gates also recommends “investing optimistically” once the background and purposes of any company or business have been taken into account, something that in a Linkedin post he said he had learned from his friend Warren Buffet.