How to keep your investments intact during recession

The emergency fund covers 3-6 months of your expenses. Probability is higher that during recessionary periods, you might not get any funds from banks.

Nov 19, 2015 02:11 IST India Infoline News Service

Like rain, recession is also uncertain and can leave you hapless. You can't prepare for the floods when the floods happen; likewise, you can't trim your investments during recessionary periods to keep your capital intact. Thus, here are certain tips to keep your portfolio recession-proof:

Emergency Fund is need of the hour
The emergency fund covers 3-6 months of your expenses. Probability is higher that during recessionary periods, you might not get any funds from banks. Moreover, your long-term investments may also be trading at a lower rate, and withdrawing them can disturb your overall portfolio adversely. If you want to sail through smoothly, create an emergency fund that's easily accessible to you. 

Time to diversify your income sources
Most of us take are jobs for granted and forget to prepare for contingencies. Ever increasing competition and uncertainty in the business world may shatter your dreams in a flash and force you to take jobs you never dreamed of. To avoid falling prey, never completely rely on primary earning source.
Even if you're doing great in your day job, keep one or two extra income sources as backup plans to help you through bad times. They might not make you a millionaire overnight but will surely keep you from going bankrupt during the recession.

Start planning long-term
Recession doesn't last forever, neither does bank balances unless replenished periodically.  Prident investment plan can also come handy during times of recession. Rather than putting all your eggs in one basket, diversify the risk. Don't put all the savings in one investment, spread it among different assets and create a strong portfolio.

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