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How to Weather a Slow Economy

Posted April 25, 2013 by Brent to Investing 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

How to make smart investments
In light of the recession, which began in 2007, smart investors looked for unconventional methods to keep losses at a minimum. The idea was to prevent their investments from losing value, however, they also knew the yields would be low. In essence, smart investors were riding the storm out. Asset managers were able to produce a list of investments that were low on the scale of volatility and returns. Certain investments have survived recessions before, and most investors rode the highs and lows without selling their stock or precious metals.
8 tips are recommended for investors who want to stay in the market and keep losses down:

  •  A number of stocks seem to survive recessions because their dividends stick and investors profit. Many stocks in the recession have turned around to produce billions for investors, and regularly keep a significant amount of cash on hand with strong earnings. At least a dozen corporations meet that criteria, and leave their investors content because they refuse to default on dividends.
  • Because investors saw precious metals and specifically gold as a safe investment, its price doubled. The limited supply spurred the jump in price, however, the metal is also expected to fall. Investors may want to back off from purchasing gold anytime soon since the economy is sluggish. Gold may look like a solid investment now, but if the pressure on its price continues, it will surely fall.
  • Treasury bills, on the other hand, are solid. It is almost 100 percent doubtful the Feds will ever default on T-bills. Some mature in a very short time, such as four weeks. Investors understand the low risk of T-bills. While their yield is extremely low, their risk is even lower. T-bills are readily available at community banks.
  • The Swiss Franc has picked up momentum, which is no surprise because the Swiss are impeccable at balancing. In 2011, the franc made an impressive increase. All currency is subject to fall, but the franc is amidst the fairly healthy European Union, which is attractive to investors.
  • Several American corporations maintained strong balance sheets in the face of the recession. Triple-A Corporate bonds pay low interest rates, and make up for it in safety.
  • Gold is one of several precious metals. Silver is the more inexpensive of the two, placing it on the list of economical investments. It has sold for $40 per ounce, while gold was at $1,600. The market for silver is small, but the demand for silver is higher than gold because it is more useful in industry. Another advantage to silver is it serves as a fallback currency if the U.S. dollar drops in value.
  • Smart investors know how to make the most out of gold and silver. They understand how to move the metals for profit using Exchange-traded funds. In order to return gold and silver to the system, the metals must be re-certified, giving the middlemen a cut as they are purchased and sold. There are two proxies for ETFs, and they are highly liquid. Moving gold in a busted economy is next to impossible, however, ETFs bypass the difficult process. The benefits are incredible, and ETFs are entertaining because they allow investors to play a little and make predictions to hedge their portfolios.
  • Canada is enjoying a steady balance sheet that rises in value via commodities. In Canada, oil, agriculture, minerals and mining dominate the economy. In other words, these hard assets led Canada to a top trading partnership with the U.S. Canada is close in proximity to the U.S., and practices similar corporate laws.

Saving is worth its weight in gold
The second phase of surviving a recession is learning how to save money, and to say no to credit cards with high interest rates. Saving money is also an art, and takes a bit of abstract planning. Savers are always aware of their spending, and their plan includes a safe place to store the money they don’t spend. Killing debt is a saver’s first goal. As debts are paid, the money used for them gains freedom – freedom to save instead of spending it on something else. In order to kill debt, the goals to save must be established. Excellent savers plan 20 to 30 years ahead, envisioning their retirement. They also invest. Tips for saving follow a simple pattern of habits that are easy to learn.

About Brent: This article was contributed by Eleonora Marchetti. She is an expert on financial markets specializing in foreign exchange and trading in binary options. An honorary graduate of the SDA Bocconi School of Management in Italy, she provides consultation services to various economic powerhouses, including the globally renowned binary options trading firm, Banc De Binary.

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