What's a Polycrisis and Why Is Everybody Talking About it?

What happened

Global leaders and decision makers have gathered again at the World Economic Forum in Davos, Switzerland to talk about the most urgent challenges we face. This year, the word "polycrisis" is on everybody's lips. "The collective vocabularies stored in the world's great dictionaries didn't appear to hold a single world to sum up all this strife," explained a World Economic Forum blog. "So here's a new one: Polycrisis."

So what

The thinking behind the new word is that there are a number of interconnected negative events that could hit at the same time. Those events could compound in such a way that the impact is much bigger than the sum of its parts. For example, Russia's invasion of Ukraine played a part in the sky-high food and energy costs we saw last year. In some countries, this has fueled social unrest. In the coming decades we may see more of these types of disruptions, with even more serious consequences.

When the world's leaders feel the need to coin new phrases to describe impending doom, it is worth taking notice. But at the same time, you'd be forgiven for feeling tired of ever more dramatic warnings about the future. After all, we've been struggling with an unprecedented global health crisis for the past few years, and many Americans have spent recent months preparing for a potential recession.

Now what

What matters is how you react to potential crises, not what they're called. Try not to panic about what might be in the future, and instead focus on the things you can control, such as strengthening your financial bases and building wealth.

For example, if you don't have three to six months' worth of living expenses socked away in a savings account, make this a priority. If you carry high interest debt, make a debt repayment plan. You might not be able to solve everything overnight, but every step you take will mean you're more prepared. 

It can also be easy to think that there's no point in investing for the future because so many things can go wrong. Sure, there are no guarantees. But historically, long-term stock market investments have not only beaten inflation, they've also produced decent returns. Consistent investing is a tried and tested way to build wealth.

Constant doom mongering also brings a temptation to try to time the market and only buy equities when they hit their absolute lowest. The trouble? It's impossible to know what the bottom is. If you're investing with a long-term horizon -- say 10 or 20 years -- the exact day you buy becomes less important. Open a brokerage account and look for ways to build a portfolio of quality assets that you believe will do well over time.