What to Do with Money in Recession
Tuesday, December 30, 2008 9:12
Due to the long-lasting global recession, it is the very time for taking stock and re-evaluating what your situation is, with regard to individual assets. There are five key areas to be aware of when making investment.
1. Risks
How confortable are you with the level of investment risk you are exposed to? If you have Investment Bonds or Unit Trust, exposure to risk could be recuced by simple fun switching and focus on asset allocation.
2. Diversification
Spread individual savings between different banks or building societies could be a pretty good choice.
3. Time
It is often the most important element in investing. Anyone holding equity or bond-based investments has seen a significant downturn in valuations over the past year. But if you plan to stay invested for the medium to long term, there is no need to panic or switch out of equities.
4. Inflation
With the inflation falling quickly, even the much lower savings rates available have led to the inflation and savings rates being much more aligned. It becomes more of a good news area as the recession deepens.
5. Tax
People do not get many tax breaks from the Government, so it is important to take advantages of what is available.
Pension premiums attract an immediate tax relief of 20%, with a further 20% being available for higher rate taxpayers. Meanwhile, various tax-free savings vehicles offered by different financial institutions should be paid much attention to.
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