We all have been reading the news of job losses quite often these days. Nobody knows when the pandemic COVID-19 will subside and enable the economy to go south. Everyone is somewhat worried about the effects of a potential recession that has been projected by many financial experts. However, we, as individuals, can ease the pain of this recession by taking a few steps like 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 in a much efficient way.

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Below are some experts recommended tips which can recession-proof our finances in 2020:

Manage SIPs wisely:

Many investors are confused about continuing with their SIP investments. This doubt is justified looking at how most of the SIPs 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 hike their SIP amounts to benefit from the correction later on. 

For investors whose time horizon is for the next 2 to 3 years, the returns shall be modest. For those whose target goal is arriving soon, they should consider withdrawing the accumulated amount or transfer it to a liquid fund.

All in all, this volatility in the market can act advantageously for all SIP investors, thus making it a bad idea to discontinue their Systematic Investment 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 to pick. 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 not only provides peace of mind to the individuals but is also 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 exposure to equity. 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 the volatility. Multi-asset funds are another type of hybrid funds that invest in gold, debt, and equity in different proportions. These funds cover a more considerable amount of asset diversification. One more type of hybrid fund is equity savings fund. This fund is a mix of shares, equity derivatives, and fixed income avenues. Stocks and equity derivatives form 65% of this fund’s portfolio.

Financial experts recommend not only investing in the best SIP plans but also, to invest in balanced advantage funds and equity savings fund which are the best out of all of the funds mentioned above. These funds are better to face 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 try to minimize their expenses and hence 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 just reducing som many of the unnecessary costs such as dining out or shopping for more clothes. Forgoing the prime memberships of many food delivery applications and video streaming applications is one more way how we can save money. 

People should also consider putting a hold on their plans of purchasing a house, a car, or having 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 of wealth. This means that people should not finance their purchases in the hope of their increments, bonuses, etc. They should also avoid using credit cards for significant investments in this uncertain time. Rather, by investing in the best SIP plans, you can utilize the returns accrued in order to fund any unnecessary spend that is currently being deducted from your main source of income.

Already, several companies have given a heads up to 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 on the expenses or investing in the best SIP plan available, or both.