The hardest time to be alive is during a recession. Unemployment, reduced demand, and a scarcity of investment opportunities are all consequences of the economic downturn. It, in turn, causes psychological distress by putting undue financial pressure on the person. There are, fortunately, ways to protect yourself from the worst effects of a recession. Here are some suggestions for how to safeguard your wealth management account if the economy tanks.
Stopping SIPs is a bad idea
A systematic medium to a long-term investment portfolio in mutual funds of your choosing is known as a SIP. When market conditions deteriorate, and the net asset value of the mutual funds falls, most investors become concerned. On the one hand, you are going through a financial crisis, and on the other, your investment is becoming a financial burden.
During this time, however, most SIPs generate more units for investors. After the economy recovers, the units would have accumulated into a large corpus a few years later. As a result, wealth management experts advise against cancelling your SIPs due to a downturn in the economy.
Invest in gold to diversify your portfolio
Experts suggest holding 10–15 % of your wealth account in gold to protect against a drop in stock markets during a recession. It is a widespread practice among investors during periods of volatility, as gold is a shield against inflation and economic slowdowns. Gold prices have risen because of India's slowing economic growth and the outbreak of the coronavirus. Physical gold may not be the best option. Consider gold funds instead.
Physical gold funds provide investors with the option of purchasing pure gold at a lower cost than physical gold. Furthermore, there is no risk of fraud, and investors can sell these units at a market-linked price with the click of a button.
Create a nest egg
This is a no-brainer, but its importance cannot get overstated. A 'nest egg' is money set aside for an unforeseeable future case. To put it another way, this is your rainy-day reserve. Your investment strategies can generate income, but they are not liquid.
You can run out of liquid cash if you get laid off during a recession. It can be avoided by putting money aside in fixed deposits, savings accounts, short-term debt funds, and other saving-oriented financial instruments. It is a part of wealth management in India.
Finally, consider diversifying your wealth management India with gold funds, and your family, establishing an emergency fund, and continuing to invest in long-term SIPs during a recession to secure your money.