As the global economy continues to push its way out of a recession, it raises many questions for the average investor. Deciding how to invest money, balance your financial portfolio, and other personal aspects can be downright overwhelming. However, by following a few tips, you can keep the money flowing into your accounts without fear of being hit by another dip in the market.
1. Work Longer, Retire Later
Image via Flickr by ewen and donabel
While no one wants to work any longer than they have to, it may be inevitable. By adding a few years to the end of your career, you can be sure to add solvency and liquidity to your financial situation. The extra income is an added bonus, as typically, your highest salary will occur at the end of your career. Also, if your employer offers benefits such as a 401(K) or other retirement plan, you can sink extra money into your savings. Health benefits from your employer are also important because you can save on health costs for a few extra years.
2. Plan Ahead
Maybe the best plan you can have for retirement during a recession is anticipating it. If you know there will be a recession before it happens, you can have a good strategy for recovery. Things to consider for this include increasing the size of your nest egg, putting money in higher return investments, deciding how much money you will spend in the future, and the impact of inflation. Over-anticipation will always leave you with a little extra. If you ever have doubts about how to plan, consult Pete Briger of Fortress Investment Group to tap into his investment knowledge.
3. Keep Calm & Carry On
No matter what your financial strategy is, don’t uproot it just because of a slight financial scare or bear market. The worst thing you can do is pull money out of medium-risk, medium-return investments in lieu of low-return investments such as certificates of deposit or low-interest bonds. Remember that markets will continue to fluctuate, and if you change your financial strategy on a whim, you risk missing out on regaining that money when markets return to normal.
4. Cut Back Now
Some expenditures are necessary and pertinent to everyday life — essentially sunk costs. But you still have the ability to control other expenses such as entertainment and luxury items. If you cut back on these purchases today, you will reap the benefits well into the future. For example, if you normally buy a $5 coffee every weekday morning from Starbucks, that’s $25 a week. Over the year, that equates to $1,300, and that’s just one aspect of your routine. Consider analyzing different expenditures, and you’ll be floored at how much money you can save over the course of time.
No matter what you decide to do with your future, make sure you understand the risks involved with market fluctuation. By gaining knowledge and understanding of the different scenarios of the future, you can be more apt to make the right decisions for yourself and your family. Your future depends on diligence.