How to Manage Investments in a Recession In a recession, there are investment strategies you can take advantage of to avoid losing money when the value of currency decreases. During a recession, certain consumer goods and services will continue to be purchased by both consumers and manufacturers; whereas prices of homes and properties will also be significantly lower than usual. By investing in food commodities and real estate, you can continue to make money during a recession, and come out ahead when inflation occurs. You can also invest in goods and services that are not impacted by your economys recession; such as precious metals, agricultural resources, foreign currency, and more. Continue reading this article to learn all about how to manage your investments during an economic recession. Steps Tips and Warnings 1 Invest in food commodities that are constantly in demand. Consumers and manufacturers will continue to buy certain food staples regardless of the economys current state; plus, you will earn more from your investments when inflation occurs. Buy into food commodities such as rice, corn, sugar, wheat, salt, coffee beans, and other similar food staples. 2 Invest in precious metals. Precious metals such as platinum, gold, and silver do not lose their value as currency does in times of a recession. These metals are also constantly in high demand by manufacturers of automobiles and other forms of technology. Place your precious metals investments into various areas to increase the diversity of your investment portfolio. For example, invest in both physical bars of gold, and in gold mining stocks. 3 Invest in timber and similar agricultural goods. Timber increases in value over a period of time and is considered a high-demand commodity. Other examples of agricultural goods that are high in demand are crude oil and coal. 4 Make investments in real estate. Although the value of homes and other properties you invest in may depreciate during a recession, you can still make money on properties by turning them into rental properties. Buy properties that you can pay off within a short amount of time. In most cases, although properties being sold during a recession will have an overall low price, their mortgage interest rates will be relatively high. 5 Buy and sell foreign currencies. In an economic recession, the value of that particular economys currency will decrease. For example, if you own United States currency that has recently decreased in value due to economic recession, sell your United States currency and purchase currency of a higher value from another country. Work with a foreign exchange or foreign investment market to buy, sell, and trade foreign currencies. 6 Invest in stocks with companies that have strong cash flows and a long business history. Companies with strong cash flows that have been in business for many years are more likely to sustain in profit and production during a recession. Purchase stock in companies that manufacture or produce common household goods and commodities. If you purchase stock in companies that manufacture technical gadgets, you may lose money since consumers can hold off on purchasing these types of goods during a recession. 7 Invest in fixed-income markets or securities. Fixed-income investments are ideal during a recession because they are generally way lower in risk than investments in corporate bonds and mortgage-backed securities. Examples of fixed-income investments are certificates of deposit, municipal notes, and treasury bills.
Posted on: Wed, 12 Mar 2014 14:46:58 +0000
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