First, be prepared for the risks of your regular income. The degree of impact can vary depending on the sector you operate in, the firm you work for, the elasticity of demand for your goods and services, and many other factors that you do not control or realistically estimate. Can’t put. But a drop in demand for products and services can mean little or no pay increases, pay cuts, job role cuts, or extreme job losses. Don’t be reckless in changing your job, or looking for new roles. Stick with tested waters when the going gets tough. Finding a new job can be difficult. If you can supplement your revenue Pick them up before the job market hits a deep recession, along with other moonlight opportunities, or opportunities for part-time work. Postpone decisions to quit or take leave. Maintain multiple earner status for the family.
Second, don’t fish in dirty water and try to risk making investment decisions that you consider ‘smart’. This is not the time to bet on the dollar, oil or gold. You will risk buying over the top and staying in a bearish phase and not making yourself any money. During a recession, businesses don’t make money investment Decision. Neither should. Don’t buy real estate because someone told you that the value of the property will never decrease. Keep in mind that many assets rise in value when demand is high and interest rates are low and will fall sharply when those conditions reverse.
Third, business failure is a common occurrence in a recession. Weak businesses are at greater risk, and new vulnerabilities will appear as the situation worsens. Do not speculate on stocks and unknown names. Stay away from IPOs and small-cap stocks and put aside the temptation to think of a new name as the next multi-bagger. Stick to known and established names that will stand up during tough times. large-cap stock And Fund There are better ways during tough times.
Fourth, don’t start any new business yourself. This is not the time to try entrepreneurship. When interest rates are high, and demand for goods and services is low, you will struggle to establish and grow. Profit making businesses get stressed in times of recession and resort to strategies to manage unsold stocks and low capacity. Go back to the first point and secure your income.
Fifth, don’t sell your stocks and assets in panic. Falling prices are not the right time to sell. The timing of the markets almost never pays the ordinary investor. Don’t assume that you have acquired good trading skills over time and are running the economic cycle. Unless you’re in financial trouble, don’t liquidate your assets when prices drop. Proceed after making sure what you have is of good quality. Staying invested with quality stocks and assets is your insurance against permanent damage to your money at the turn of economic cycles.
Sixth, don’t get a new loan. Put a brake on borrowing. In an environment of low job security, low demand for goods and services and high interest rates, high home loans will become difficult to repay. Cut down on debt if you can and live within your means. Even if you cannot save as before, make sure you are not adding liabilities at the wrong time.
Seventh, if you are one of the lucky few who have regular surplus to invest, choose Debt over Equity. Debt is your cushion against falling equity markets and supplementing income during tough times. If you stick with short-term loans, you will also benefit from rising interest rates as central banks harden the money and raise interest rates. Debt with a higher burden on your monthly allocation of savings.
Eighth, reduce expenses wherever possible to keep income sufficient to cover essentials even if there is a pay cut or job loss. Cut down on discretionary spending and be aware that these reactions to households will further reduce demand for goods and services. It is natural to cut back on income risk and the natural reaction of families to higher interest rates. Don’t think that you are the exception.
Ninth, upgrade and update and prepare for a wider role for yourself. Recession is the time to move all your assets to save your income and wealth from erosion. If you have invested in debt products and have shied away from investing in equities, you should look into and invest in human assets to check any fall in value. Nothing is lost in a recession if you stay alive and well and employable. There is always an opportunity to start all over again.
Tenth, don’t assume it’s the end of the world and make absolutely pessimistic decisions. A recession is part of an economic cycle and has to be traversed until it reverses. Resilience is built when you face a downturn and overconfidence calms when assumptions go wrong.
It is time to be conservative with jobs, income and investments and move on with life without too much speculation and optimism. Focus on existence, the time to rise and flourish will soon come. It is precious to think about thoughts of control and anxiety. Much time can be spent debating macro-level events, focusing on news headlines, and behaving as if the well-being of the world is at stake. The concerns about these high-level events seem important and valid to many. But our circle of control is where our real work lies. Our jobs, our income, our debts, our assets, our expenses and the well-being of our home are matters of our concern that we need to act on. Pay attention to them and you won’t miss much more than ignore the dreaded macro arguments.
(The author is chairperson of the Center for Investment Education and Learning.)