Here are 4 tips to recession-proof your finances in 2024

We all have been reading the news of job losses quite often these days. Nobody knows when the COVID-19 pandemic will subside, enabling the economy to go south. Everyone is worried about the effects of a potential recession that has been projected by many financial experts. However, as individuals, we can ease the pain of this recession by taking a few steps, such as investing in the best SIP plans and doing better financial planning for our future. These habits and strategies will help us and our families combat this economic slowdown much more efficiently.

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Below are some experts recommended tips that can recession-proof our finances in 2024:

Manage SIPs wisely:

Many investors need clarification about continuing with their SIP investments. This doubt is justified by looking at how most SIPs that started three years back are in red. However, discontinuing a SIP during this hour would be a big mistake on an equity investor’s part. This step will defeat the purpose of having a SIP since it will disable the investor to accumulate more. Arithematically, the best SIP plans prove to be very advantageous in the downturn time. As the Net Asset Value of the funds goes down, SIPs fetch more units to its investors. These accumulated units may transform into massive amounts in the future when the market recovers. Many investors in the past have gained by sticking around through lean phases. Therefore investors should not discontinue wit their SIPs during this hour and should consider investing in some best SIP plans to reap the benefits when the market stabilizes. Many experts also suggest that investors should increase their SIP amounts to benefit from the correction later. 

The returns shall be modest for investors whose time horizon is for the next 2 to 3 years. Those whose target goal is arriving soon should consider withdrawing or transferring the accumulated amountg it to a liquid fund.

All in all, this market volatility can benefit all SIP investors, making it a bad idea to discontinue their SIP Plans. Instead, we should consider exploring and investing in some of the best SIP plans.

Clear the debt:

Apart from applying for the best SIP plans, clearing the debt is another smart choice. The economic slowdown is causing many people to lose their jobs. This fear of unemployment, together with the stress of being under obligation, can be fixed by paying down all the outstanding debts. This habit provides peace of mind to individuals and is generally a very healthy habit. Clearing off debts will save individuals from a load of interest in this hour of slowdown and make room for more important expenses. 

Less volatile funds:

Hybrid funds are the best bid for investors who do not have a cast-iron stomach but want equity exposure. These funds protect the investor by limiting the volatility in the returns. There are various types of hybrid funds. One among them is the balanced advantage funds or the dynamic asset allocation funds. Thes funds invest in both debt and equity, in varying exposure ranging from 0 to 100%. Thus, these funds can adjust according to their volatility. Multi-asset funds are another type of hybrid funds that invest in gold, debt, and equity in different proportions. These funds cover a considerable amount of asset diversification. One more type of hybrid fund is an equity savings fund. This fund mixes shares, equity derivatives, and fixed-income avenues. Stocks and equity derivatives form 65% of this fund’s portfolio.

Financial experts recommend investing in the best SIP plans and balanced advantage funds and equity savings funds, which are the best out of all of the funds mentioned above. These funds are better suited to facing the downside and are also tax efficient.

Reduce unnecessary spends

A penny saved is a penny earned. Therefore, in these hours of economic slowdown, people should minimize their expenses and maximize their income. Individuals should reduce their discretionary costs by making suitable adjustments in their lifestyles. It is surprising to see how much we as individuals can save by reducing unnecessary costs such as dining out or shopping for more clothes. Forgoing the prime memberships of many food delivery and video streaming applications is one more way to save money. 

People should also consider holding off on plans to purchase a house, a car, or a vacation until the economy is secure. Postponing these significant ticket expenses or considering alternative options such as pre-owned or refurbished products can help cut down the expenditure.

Another crucial thing to keep in mind is not to buy anything in anticipation of future income or wealth. This means that people should refrain from financing their purchases in the hope of their increments, bonuses, etc. They should also avoid using credit cards for significant investments in this uncertain time. Instead, by investing in the best SIP plans, you can utilize the returns accrued to fund any unnecessary spending that is currently being deducted from your primary source of income.

Already, several companies have warned their staff about cost-cutting and how they may resort to staff downsizing. Since nobody knows how bad things can get, we should be ready for the worst to come. A wise individual will not make provisions for only a month or two but at least a year by either cutting expenses investing in the best SIP plan available, or both.