Options To Protect Finances against Recession In Indian Economy

My Dear readers, followers, taxpayers & clients,  
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Options to protect Our Finances against recession in Indian Economics:-

Protect Finances against Recession

A) Opt for less volatile funds:-
       In the prevailing market condition, hybrid funds are best placed to protect the downside for the investor. These investments are structured to limit the volatility in returns and suit investors who can’t stomach ups and downs, yet need some equity exposure. Hybrid funds come in different flavours.
       On the other hand Multi-asset funds can be good investment option for investing across equity, debt and gold in varying proportions, subject to a minimum for each segment. These afford a higher degree of asset diversification under one umbrella. Another category of hybrid nature is equity savings funds. 
B)              Avoid investing in property:-
         Builders and housing finance companies are attracting buyers with big discounts and low loan rates. The housing market in top Indian cities has not done too well in the past one year. In the current economical conditions, residential prices in all big cities either fell or rose marginally .Given the looming threat of an economic slowdown, the situation is unlikely to improve in the next few quarters. Builders are sitting on huge inventories which will take a long time to clear. This can hurt some of my readers who are in this business. But this is true. If we see, large number of ready flats are empty in big cities. 
C)              Reduce unnecessary / discretionary spends:-
         It is well said that “a penny saved is a penny earned”. In a slowdown, we should examine our expenses to identify the ways to earn more. Also we should tweak our lifestyle and budget to reduce discretionary spends and defer big-ticket purchases. We will be surprised how much we can save by curbing even small expenses.
        This is also the time to defer big-ticket expenses. Put plans to expend more on hold till the time your finances are more secure. Also in businesses, we should try to reduce unnecessary expenses.
 
D)              Formulate debt strategies:-
       The loss in business can throw our finances into a tizzy if we have big loans to repay. Unlike corporate defaulters who have access to formal mechanism for loan restructuring, retail borrowers enjoy no such privileges. But we can leverage our repayment history and relationship with the lender to extract some concessions. Whether it is a home loan or a car loan, banks typically don’t want to repossess the assets and will try to avoid litigation as far as possible. In most cases, they are more than willing to make repayment easy. Approach the lender, providing justifiable reasons and request for rescheduling, before it initiates action on recovery. 
E)               Don’t stop SIPs now if invested in SIPs:-
        The discontinuance of SIPs in a downturn is perhaps the biggest mistake an equity investor can make. It defeats the very purpose of the SIP by denying the investor the opportunity to accumulate more when prices are low. The concerns of investors are understandable. Data from mutual fund tracker Value Research shows that SIPs in two out of every five diversified equity funds started three years ago are in the red today.
        However, a downturn is the time when SIPs actually work to our advantage. It’s simple arithmetic. As markets turn weak and NAVs of funds go down, every SIP fetches us more units. A few years down the line when the market recovers, the accumulated units will translate into a huge corpus. It was seen that, investors have gained by continuing SIPs through lean market phases and sticking around for the longer term.
 
F)               Make investments in traditional options:- 
         In we want to secure our funds, another option is investment in traditional options like NSC, FDs, Postal Investments, etc. These are the secured investment options. Though some of these give less returns, but it can be best option to secured our funds. These secured funds always help in our bad financial situations. 
     So these can be the basic options for protect our finances against recession in Indian economics. I hope these may helpful to my readers.
See You all in the next blog.
  

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