When the economy is going through a downturn

When economies go through troubled times, the country’s finances get affected and investments suffer. The effects of this can be seen even after the economy starts recovering. In today’s global economy, where countries and markets are connected to one another, any ripple in one country has the power and capability to make an impact in another. So a labour strike in China affects the US economy while a slowdown in oil production in the Middle East casts a shadow over the Indian economy. When the world thus hovers between stability and instability, it becomes imperative to figure out where one should invest one’s money.

It is wise to keep saving even when the economy is going through a downturn – your commitment to creating wealth should not stop. Choose schemes that are simple and easy to understand. The less complicated the scheme, the easier it will be for you to put your money into it.

Money is paper and metal currency and holds value. But precious metals are also good investment options. They are likely to appreciate in value while money may not – if interest rates change or the stock market crashes. Putting part of your money into gold, silver and other precious metals will bring good returns in the long run.

When a country faces an economic and financial crisis

When a country faces an economic and financial crisis, the government could shut down banks or it could repossess the money in the banks. When this happens, your money that is in the bank could get confiscated and you may find it difficult to get the money for a long time. It thus makes sense for you to understand the economic situation and the different investment options so that you can decide where to put your money. You need to protect your money as well as have sufficient money for your expenses.

During an economic downturn, it might be tempting to hold your entire wealth in cash at home. But that gets you no return at all. It makes sense to understand how the market works, what the risks are and then invest. Stay focused. Have a back-up plan for your investments. Remember to diversify your portfolio so that your losses are contained when the economy goes tumbling down. Follow Warren Buffet’s rules for making money. Rule # 1 – Never lose money. Rule # 2 – Always follow Rule # 1.