Gold Prices have crossed the Rs 40,000 mark in India as recession fears build. The Global market is heading for a recession as US and China fight a trade war. The German and British economies are in bad shape.
Let’s take a look back home. Tens of thousands are losing jobs as the auto sector faces the worst crisis in decades. Maruti Suzuki has cut 3,000 jobs due to the auto slump. More than 2.3 Lakh jobs have been lost as the auto industry faces the worst crisis in 20 years. The component sector saw an 8-10 Lakh job cut. Most of the job loss is among contract employees. Yet, regular workers are shaken too as manufacturing slows down.
This begs the question. How to protect money in a recession? Want to know more on Investment Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
You must invest in mutual funds via SIPs with a long term horizon of 5-7 years. The worst time to stop SIPs is during a stock market slump. It defeats the very purpose of the SIP.
A stock market crash gives the opportunity to accumulate mutual fund units at low NAVs. (Net Asset Value). It’s simple. When the stock market crashes, the NAV of mutual funds go down. Each SIP fetches more units.
Now, the stock market would recover in a few years time and the accumulated units would translate into a huge corpus. A stock market crash (volatility) during the time you start SIPs or during the middle stages of SIPs is good for your portfolio.
If you stop SIPs in a stock market crash you miss an opportunity to accumulate mutual fund units at a low cost. By the time you enter, markets would have gone up.
See Also: Investment Planning
Many builders are luring potential buyers with huge discounts. The housing market has not done well over the last year. Expect the economic conditions to stay gloomy for the next few quarters. Builders are sitting on massive inventories as sales slump.
The reason for the slowdown in the housing sector? Low demand, pile up of inventories and stringent regulations have kept home prices low.
Don’t invest in a property now. This is a time to buy the first property. Postpone investing in a second property and focus on investments which offer high returns.
See Also: Steps in the Financial Planning Process
You must diversify the portfolio to reduce risk. Investors rush to gold during a recession. Gold is a safe haven during a recession. Experts say you must have at least 10-15% of gold in the portfolio. Veteran Investor Mark Mobius says “Buy gold at any level.”
Don’t buy physical gold like gold ornaments as it involves making charges. You also have safety, liquidity and purity issues. Take up gold investments through gold ETFs and gold sovereign bonds. You can purchase gold in denominations as low as 1 gram.
Invest in gold as part of overall asset allocation.
See Also: Importance of Financial Planning
As jobs disappear make sure there’s an emergency fund. You need money for a financial emergency. Follow this simple thumb rule: Have at least 3 months of living expenses in the emergency fund. Make this 6 months of living expenses if you are married.
Park your emergency corpus in a savings bank account, sweep-in account, FD, liquid fund and short-term debt fund for liquidity.
You May Also Watch
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.
Be Wise, Get Rich.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.