Are you prepared for a possible recession? How do you think your investments will handle an economic downturn?
Since many of us are already jobless or at risk of losing our jobs because of the COVID-19 pandemic, the talk of a recession is once again in the air.
If you’ve prepared well for these trying times, good for you. The recession will not change your life that much and you’ll probably get through all of this without needing to sell your assets. However, if not, don’t panic. As a real estate agent and property advisor, I can help you. Drop me a message and let’s talk about your current finances.
In the meantime, read on to learn what you can do today. The following are tips and advice to help you prepare for an upcoming recession.
1. Ensure You Have Cash Saved for Emergencies
If you want to have peace of mind, start saving for an emergency fund TODAY. Most people should have emergency accounts that are at least 3-6 months of their basic expenses.
It might also be a good time for you to shift some of your investment assets with low liquidity to a higher liquidity investment vehicle to ensure that you can tide through this crisis,
One thing you should keep at the back of your mind is this: Banks do Fail. In 2008 during the financial crisis, the Washington Mutual who was holding 308 billion dollars worth of assets was shut down by the U.S government for having insufficient liquidity to meet its financial obligation.
Luckily for depositors, part of their money was backed and protected by the State Based Federal Deposit Insurance Corporation. In Singapore, we have a similar vehicle called the SDIC, which guarantees the monies in our deposits up to $75,000.
2. Change Your Money Habits
Bad spending habits are hard to break especially if it has become a routine. Good spending habits are even harder to form. Scientifically, it takes at least 21 days of consistent action and being in the correct mindset to form a new habit. Here are ways you can leverage on technology to help you stay on track!
- Barter Vista, BarterXchange – Barter trading is an increasing trend. People are coming together to barter, trade their excessive inventory or in case of services, exchanging their slow time, in return for things that they will otherwise use cash to buy. Imagine trading your marketing services for a bunch of free haircuts, or exchanging your spare oven for a home printer! The possibilities here are endless.
- Carousel – How about selling away things you do not need? Or if you are planning to go shopping, get items that are preloved instead of brand new? You might be surprised at how much you could raise and save!.
- Acorns, Mint, Wallet – If you’re looking for an app for easy saving, budgeting and managing your finance, there are many apps online that help you do that. Acorns, Mint and Wallet are just a few of them.
Or you could just be like me, who paid for a subscription to Netflix, and that made up most of my entertainment budget and kept me occupied and happy through the circuit breaker period.
3. Find an Extra Source of Income
If you want to have an additional source of income, you must be ready to put in the work. There are many ways you can earn more money even if you have a full-time job. For example, you can sell your services and expertise on websites like Fiverr and Upwork.
You can pick up Social Media Management skills online through free courses and then manage the social media of small businesses.
If you have a vehicle, you could hop onto the food delivery bandwagon, or apply to be a Grabhitch driver.
I deal with clients who want to invest in property to get extra sources of income. If you’d like, I can help you too. Drop me a message and let’s talk about real estate investment options that will suit your finances right now.
4. Long Term Investments
Be mindful of how you manage your investment especially during an on-coming recession. Be Careful not to fall into herd mentality and sell out of panic and fear. Here at The Smart Singaporean, we encourage investors to have their entry and exits planned out as part of their investment strategies so that we will not succumb and cave to external pressures.
During the recession, the market can bring your investment down by as much as 15% (or worse). If you want to survive a recession, maintain discipline and stay true to your investment plan.
5. Build a Diverse Investment Portfolio
Seasoned investors would tell you that it is not a good idea to have all your assets in one basket. In order to protect your finances and withstand the impact of a recession or market crash, diversification is key.
The best way to do that is to invest your money in assets that aren’t strongly correlated. This also applies in your primary occupation and business, you should invest your money in something that’s unrelated to your business.
6. Maintain Good Credit
This is a no-brainer. People who have good credit scores are the ones whose loans or credit cards will get approved when credit markets tighten. During the recession, banks will tighten their lending as more and more people lose their jobs and take pay cuts.
During these challenging economic times, having good credit standing can help you get funding for your business. So as much as possible, maintain your good credit now. Keep up with your bills, regularly pay your debts, and keep your account in good standing.
7. Ask for Help
Work with a financial advisor to help you handle your financial situation now. Investment advisors can help you protect your money when you need it the most
Are you ready for the next recession? As a real estate agent and financial adviser, I can help you sort out your finances and investments. I can also teach you important property advice to help you prepare for the upcoming recession. Drop me a message and let’s talk!