Economic recession is some time is an emotion and pessimistic feeling spread very fast and in fact
\ncreate a recession.
\nAS the feeling gets stronger individual cut down expenses by way of avoiding loans and discretionary
\nspending. As it grows in number the slow down hits the company and the cut in production and
\ninventories and leads to reduce in working hours and gradually leads to cut in man power.
\nHow serious in the recession and how long it stays in an economy? Several times it has been seen
\nthat it last for a year or two. So typically, what an individual has to do shield himself from it and also
\nthe business person needs to do are explained below.<\/p>\n
Ten points to beat the recession.<\/p>\n
Emergency fund: Often across life cycle it is advised that you need to have fund to meet eventuality
\neither 3,6 12 months expenses as back up to tide the situation. If you are employed in high risk job
\nthat are going to get hit in recessionary period more than any other sector you need to have higher
\ncorpus.it should be predominantly in financial assets either deposits, liquid mutual fund or high
\ninterest giving savings account .this will shield you to greater extend from the impact of recession.<\/p>\n
Track down your monthly expenses: It is always good to have a tap on the expenses and more in a
\nrecessionary period. By doing so you can eliminate unnecessary expenses. For example, if you are
\nfrequent movie goer or going to hotel cut down the no of visits this will help you to save money to
\ntide over the difficult times. If you are one among the frequent week end traveller make it to at least
\nmonthly once till you feel comfort of the economic situation.<\/p>\n
Pay down debt: In a tough economic situation, in India earning high returns are not possible, so it is
\nadvisable to reduce interest outgo provided if your repayment interest is higher than the possibility
\nof earning.<\/p>\n
Tracking your debt: If you have good credit score and good repayment track record better to find
\navenue to reduce your borrowing cost. With limited off take for loan from borrowers the bank may
\noffer special incentive for new borrowers. If your existing loan is at higher interest and if you can get
\nthe new loan at least one per cent lower than the existing interest rate change the lender. However,
\nkeep in mind of the processing charge and pre closure before shifting the loan.<\/p>\n
Buy what is must avoid temptation: Since job situation may undergo challenging period in
\nrecessionary trend avoid unnecessary debt trap. In this situation better keep adequate reserves this<\/p>\n
will give peace of mind to family and as well as better balance in the work place. So, in a cool
\nworking environment good performance will help you to save your position in the organisation.<\/p>\n
Go through your portfolio: Revisit your portfolio if you have bought junk stocks at higher price and if
\nthe recovery is remote sell it.In the event of deposits with some NBFC and still they have not faced
\nany issue still if you are conservative investors better go for early redemption and move to company
\nor bank even if the earning is a per cent lower. Once things are normalized then the interest rate
\nmight again jump with NBFC so you can move the deposits back to high yield deposits. If you are
\nholding the gold and keep looking for stagnation and sell if at higher prices.<\/p>\n
We have seen after one -two years rally gold under performance for few years. Take money out at
\npeak and redeploy at equity mutual fund.<\/p>\n
For self- employed \/business People<\/p>\n
Evaluate and eliminate debt: During the peak of the business cycle you could have taken loans at
\nhigher interest to meet the demand. Now, earnings itself a challenge better close the loan or look for
\nbetter interest rate. However, continue to have the working capital limit this will be useful in the
\nevent of the recovery in the economy. This will help you to have early mover advantage and to
\nacquire new clients don\u2019t get tempted to trade in equity or commodity to compensate the loss of
\nbusiness income.<\/p>\n
Downsize head count: If you have less work at least try and reduce the working days and give
\nweekly two day off. At least this will reduce your monthly over head cost such as power and
\nmiscellaneous expenses. This is the time to identify the under performer and eliminate them.<\/p>\n
Reduce the inventories: High inventories will eat away the profits and also leads to high interest
\ncost. So, produce based on the demand if you have higher inventories due to previous business cycle
\ngive on credit to worthy clients and this will alteast fix you sale.<\/p>\n
Concentrate on sales cut down discount: Business people look to give higher discount to clear
\ninventories but keep in mind the cost of manufacturing or trading cost. If your cost of inventories
\nbuilt on your own internal cost and not going to impact your finance be careful while giving the
\ndiscount.<\/p>\n","protected":false},"excerpt":{"rendered":"
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