How to Deal with Recession

How to Deal with Recession is something we should all know. Why I said that is because throughout our lifetime, we would definitely experience at least a few recession. I myself have experienced 3 or at least can feel their impact, the 1997 Asian Financial Crisis, the 2000 Internet Bubble and also the recent Sub-prime Crisis.

Here are a few tips on how to save some money.

1) Cash is King

It would be better to go back to your budget planning and see if you have allow yourself to spend on unnecessary things. Why I said that is because as we all know, recessions follows booms. And during booms, because we feel rich, we would tend to pamper ourselves (nothing wrong with that of course, since we work hard). But because of recession, we would need more cash in the hand and how to get that is to revisit our budget.

2) Go for the second best

It is a matter of needs and wants, usually if the second best can give us similar satisfaction and at a lower costs than the very best, it would make sense to purchase the second best since again, cash is king.

3) Go for housebrands

Provisions is a place where we can save quite a bit since it forms a great part of our expenses. At times like this, maybe we do not need to pay so much for the brand thus I would recommend going for housebrands since they are usually cheaper.

Here are some tips at the moment, will post more tips on dealing with recession as and when I come across. We are survivor, we outplay, outwit and outlast the Recession Demon.

For more information on budget planning, please click here.

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Having an "Opportunity" Fund

Having and Opportunity Fund is overlooked by many investors, including savvy investors who have been in the investing world for many years.

So what is an Opportunity Fund? Basically, it is a sum of liquid assets, usually cash or saving deposits. At this time where there is a "fire sale" on the stock market where stocks, especially blue chips are at their lowest (usually 52 weeks lowest), an available pool of cash to take advantage of the low price would position investors to benefit when the economy recovers and looking back at history, we know that the economy will always recover. It's recovery is only a matter of time.

For most investors, this fund should not be similar to the emergency fund that you read about in most financial planning books or newspaper articles. This emergency fund as read should be equivalent to 6-12 mths of monthly expenses,(depending on how risk-averse you are). Once this fund has been set aside, you should then start setting aside another sum for your Opportunity Fund.

Economic or financial crises are part and parcel of life so we might as well prepare ourselves to take advantage of it. For those that are just starting out, it would be better to learn more about the available investment tools.

For more information on financial planning and investment tools, please click here.

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