We’ve all seen the signs. Economy and business analysts have been at the forefront of warning UK citizens of an economic downturn during the past few months. Although a recession is not yet upon Great Britain, the official estimates from IHS Markit/CIPS Purchasing Managers’ Index, published in August 2019, showed economic contractions across the board.
Bath is one of the few real estate markets in the UK where property investment is actually a sound idea through the recession. Pritchards with its top Bath estate agents are here to help you make sense of Bath properties and secure the best deal for your assets.
Technical vs Practical Recession
If we are to abide by economic theory, two consecutive negative growth quarters are necessary for a recession to be officially declared. The only reason this has not yet taken place is that the services sector has pulled more than its weight as of late. To be fair, it does account for 4/5ths of Britain’s GDP. Up until now, good service performance helped compensate for the significant downsizing of the UK’s industry.
And it’s not just the UK that is down-shifting its industry – several European countries are going through the same phase. This is indicative of the fact that, when a recession does occur, it will most likely happen in more than just one country, much like it did back in 2007/8.
So, how does one protect their financial assets during a recession? Below, you’ll find a list of practical advice you can follow to at least partially dodge the uppercut of a depression.
No Time Is Too Early
#1. SIPs Are Always a Good Idea. Short for systematic investment plans, SIPs usually work best during volatile markets. They’re the ones that get customers the most value if they don’t mind weathering the storm.
#2. Focus on Long Term. If you absolutely need your cash in the next 2-3 years, it might be best to switch over to a liquid fund. It’s important to look for a longer timeframe in order to give your SIP portfolio a chance to purchase at low prices. Then, as soon as the markets turn bullish again, you’ll actually make a profit.
#3. Less Volatility, More Stability. Hybrid funds should be your go-to place to protect financial assets simply because they’re not subjected to the same ups and downs as the rest of the market. Dynamic asset allocation, multi-asset funds, and regular hybrids are some of the most popular options.
#4. Real Estate Is Tricky. Overall, everybody warns against investing in real estate as a way to protect their finances during a recession. This is a general rule that has some exceptions, though, because certain local markets seem to have their own mind. Bath, for instance, held steady even through the last recession. By 2010, homeowners were already making a profit off their property.
Navigating a macro-economic downturn can be tricky, especially if you want to make sure you lose as little of your money’s worth as possible. Fortunately, the right investment plan, as well as the right property can secure your position and help you land on your feet once the weather clears.