How could you make money investing during a recession? We take a look below.
Reviewing your contingency fund
It is important to have an emergency fund, and this becomes even more important when there is economic uncertainty. Most financial experts advise people to have at least six months of bills and expenses saved up so it can help them when it reaches a point where they have to rely on their savings. You need to ensure you have easy access to this case. This means it shouldn’t be tied to complex investments or fixed-term accounts.
Making sure money is working hard for you
When inflation goes up, it is important to keep on top of your daily expenses. Think about your cash flow in both the medium and long term. When the interest rates are going up, it is better to go with notice or fixed-term deposits because they offer better interest rates. This can be an attractive return if you have cash that you don’t need immediately but might need in the medium term. If you have some cash and you want to open an investment portfolio, do it because while there is volatility in the short-term, it gives you the opportunity of buying ‘cheap’ assets that are going to grow in the future.
Take some time and talk with a professional wealth planner who is going to review your long, medium, and short-term plans. This will help you develop a coherent strategy. The professionals help in navigating the emotions that come with uncertainty, leaving you to focus on your aspirations and goals. Everything is done by looking at your circumstances. The human touch is what makes this a great idea.
Reviewing your investment portfolio
You shouldn’t be scared by headlines into selling your investments. It is hard to see the value of your investments go down, but your investments need to be made by looking at them in the long term, take a look at the European Smaller Companies Trust. Don’t be scared by the short-term volatility of the market. Your investment strategy has to remain the same if your long-term objective remains unchanged. If your personal circumstances have changed, you can take to the investment manager so they can provide you with options.
When you liquidate an equity portfolio when the valuation goes down, you crystalize the losses and you won’t have the chance of the upside when the markets adjust. You are going to see a lot of fluctuations, but it is important to think about the opportunities presenting potential long-term value. Diversifying your investment is important because it balances the risk. A good investment manager is going to advise you on how to balance the different asset classes. For many a favoured investment is property, a first charge bridging loan can make this possible.
Reducing your debt
Many people have been attracted to debt in recent years because of the low-interest rates. This has changed because debts cost more as a result of increased interest rates.
Store cards, credit cards, and other unsecured debt tend to cost more in terms of interest compared to secured ones like a mortgage. If you are looking to reduce your debt, then begin with the ones that have the highest interest rate. If it is not possible to reduce what you owe, you can transfer that debt to another provider offering lower rates.
Invest in business
A recession can often be a good time to invest in your business and get it ready for growth when things return. The efforts you put in now can really pay dividends when things return to normal. Additionally, a recession always brings a number of growth and paid marketing opportunities of its own for a business online or offline.
Preparing for things to get better
One thing you need to keep in mind is that a period of economic growth has always followed the previous recession. This is going to be the same case, there is no reason to think otherwise.
When you look at things in the long term, you can prepare for bumps in the process and you will come out of it in a healthier position financially. A wealth planner will help with defining your goals, establishing how realistic the goals are by looking at your current situation, guiding you when making investment decision so it matches your objectives, considering economic uncertainty, and giving you peace of mind.