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Good Investments for Times of Recession

There has been a lot of news lately that we may be headed for a recession. While this may or may not be, it is true that certain types of investments are more prone to take heavy losses if a recession could occur. You should take a look at your investment portfolio and see how it might do if we do enter one. A little preparation could be a lot better than hindsight. Here are some tips for you to help you weather the possible storm a little better.

Author: aman sood
Date: May 4, 2009 - 9:34:40 AM

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There has been a lot of news lately that we may be headed for a recession. While this may or may not be, it is true that certain types of investments are more prone to take heavy losses if a recession could occur. You should take a look at your investment portfolio and see how it might do if we do enter one. A little preparation could be a lot better than hindsight. Here are some tips for you to help you weather the possible storm a little better.

Diversify Your Investments

One of the best strategies to help you get prepared for a recession is to diversify your portfolio. This means divide it up into several groups and place that percentage into different kinds of investments. This means that not all of it should go into stock, but some should also go into bonds, mutual funds, and other investments.

You also want to stay away from putting it all into the same type of investment. In other words, do not put all your money into telecommunications, or real estate, or metals, and similar things.

Keep Your Assets As Liquid As Possible

Another safety in the world of investing is to be able to buy or sell easily. If your money gets tied to a market, it is possible that you may either lose it altogether, or it could become unusable for a long time. An example of this, as many have already learned, would be real estate. People have their investment (equity) tied up in some property they cannot sell. Although no one could have really foreseen this happening, yet it has. Some real estate properties still sell easily - repeatedly, and other properties do not. You do not want all of your assets tied to one or two things where you may not be able to sell it and get access to your cash.

By diversifying into at least 5 or 6 different markets, at least half of your investment should remain easily liquefiable. This should help you maintain value.

Watch Trend Markets

Some markets simply follow trends because a company may be investing in something that is hot now. Generally, this only has short-term value. While profit can be gained in the short term, unless that company comes up with hot items continually, they cannot maintain that status.

On the other hand, markets like metals or industries that society depends on over the long haul, these will be more stable markets in the long run - even in recessions.

Watch for the Long Term

During more difficult economic times, it becomes necessary to allow your investments to take some dives. You should expect this. In times of recession, this can occur across the board and there may not be much that you can do about it. Instead of moving your stock from one place to another, however, look for long-term trends that will often straighten themselves out and, hopefully, turn for the better.

During recessions it is also possible to get some terrific deals. Stock values may fall, but if you believe that a particular product will still be around after the recession, then you may very well want to go bargain hunting if a recession comes.

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