How to survive a recession
Are we in a recession? Maybe the answer is yes. Recession is part of the economic cycle which come once in every 10 years, well at least the previous one was when Asian Financial Market suffered heavy crash in 1997. It seems that we have not fully recovered from that episode yet and now we are in another financial turmoil caused by the high commodity price in the market in particularly the oil. This time around although it has been said since last year and people are taking some very careful precautions ahead of the predicted recession still for some the pain is too hard to handle.
We can see in the news, locally and oversea people are losing employment and inflation rates are as high as 7% as for the case of Malaysia. Along with that there are some food shortage in the world as supplies could not meet demand causing many third world countries in hunger. Of course there are helps from big nations but in the first place this food shortage problem should have not happen at all.
How do we manage our daily lives in order to survive this hard times. Well we need to teach ourselves in a shoe string budget. Since most of my expenditure in on fuel, I tried to save as much as possible on fuel and it works. There are many ways o save fuel, among them are car pooling. As for myself, I drive less these days and previously my full tank of fuel only last me 5 days, now I can stretch it to 8 days. That mean I actually save more than the days before the hike as I learned to be more prudent. Besides that my car maintenance will also be less than before.
Nowadays we are so lucky that there are online facilities like internet banking where we can pay our bills, transfer our funds at the comfort of our home. Again there is no need to drive and you can save some amount of fuel and parking. Not to mention traffic jam and the heat under the sun while you are driving. Instead of driving your car, why not walk a few meters to your lunch if it is not far from your office. At least you have the chance to exercise and maintain a good healthy lifestyle. If that it impossible pack some food from home once or twice a week and you can save some on food and fuel.
I realized that during hard times we tend to become more prudent, we try to save in all areas whenever we can. We will squeeze our toothpaste tube to the last drop in order to save on money. I see this are some good signs that we practice during recession time.
But at one end we are also saving money and we should know what to do with the money we saved. During the high inflation period it is really not advisable to save money inside a fixed deposit or a bank account for we are actually not saving anything but losing out everything to the high inflation rate. So how do we make our money work for us during recession. There are many investment vehicles out there waiting for us to explore. Among the proven ones is the equity markets. But the equity market is not for an average Joe and many have suffered badly and lost everything to the market as many are not experience enough to manage their investment. Now we can let people to manage our investment by invest in mutual funds. Investing in mutuals funds are safer than investing individually at the stock market as our investment are handled by some experienced and full time fund manager. Most long term investors are actually getting a very high return from their investment at mutual funds.
Another one is the property market although the return can be a little bit slow and investment strategy will depend mostly on the location of the property. With interest rate expecting to rise in the near future we should study more closely on the property we intend to buy. But in any recession property price are actually coming down a bit so it is also a good time to look at this type of investment.
I expect this bad time to continue until the middle of next year and many more bad times are expected to come. After the Beijing Olympics many uncertainties left for us to guess. We just hope that people are more careful and taking every possible precautions in order for the situation not to get any worse.