It is a known fact that there is bound to be a significant drop in public spending when there is a recession. In general, governments will ensure to increase the supply of money during a recessionary period. A recession may catalyze unemployment problem to a great extent and due to that, many people may find it difficult to make both ends meet. But, the good news is that there are concrete ways to survive during a recession. The following suggestions may be helpful if you want to track your personal finance through recessionary periods.
Risky Investments don’t qualify as a safe bet:
The most important point is that you should plan your finances well if you want to combat the ill-effects of recession. Experts advise that one should never commit the mistake of making risky investments, more so during recessions. If you make risky investments with the hope that they may fetch excellent returns, they may turn out to be bad decisions. Instead, you should try to reduce the quantum of the tax you pay so that your net returns will be good.
Don’t put all your eggs in one basket:
This means that you should not invest all your money in a single asset. This is potentially dangerous because if there is a slump in the market value of that particular asset, all your investments will lose their sheen and you may lose heavily. Therefore, you should diversify your investments in different assets in order to mitigate the loss of investing in a single asset, thereby, off-setting the loss with the gain from another.
Stagger your investments is the key to success:
A few experts suggest that you should not invest in one go. But, you should rather stagger your investments over a period of time. This will help by avoiding missing few of the great investment opportunities.
Successfully manage your portfolio for maximum utilization:
If you are heavily indebted and finding it tough to handle your investments, it is high time you have an open discussion with your creditors. You can opt for a debt consolidation plan. By doing so, you will not face the burden of multiple repayments every month. You can comfortably make a single monthly payment. Further, consolidation loans carry a lesser rate of interest also. You can seek the advice of debt counsellors for getting out of the quagmire of debts.
Retirement Age: Pension Plans should be selected wisely
If you are nearing your retirement age, you should focus more on pension plans. It is better to make an in-depth study of all the available schemes before taking over the most appropriate pension plan. You should never hesitate to ask questions as only then can you make a well informed decision.
Plan Your Taxes judiciously:
You should plan your taxes selectively during recessionary periods for every cent counts and you just cannot afford to lose your hard earned money. If you are not confident of handling this yourself, there is nothing wrong in seeking the advice and guidance of professionals for planning your taxes.
Recession, like any other bad times, too shall pass. But then, it should not come like a well dreaded tsunami, sweeping away all your assets in one go. Before that happens, be well prepared and draw your shields to use the dip to your advantage.