Feb 25, 2009

11 Tips in deal with Recession

11 Tips in deal with Recession. As well as my personal comments on it. 

1. Don't take any loans, buy homes, properties with loans, or even cash. Keep as much cash as possible. 
If you can confirm a job secure (which mean that you won’t be sack) during the next 3-5 years. Yet you may consider taking a loan for buying new home, properties. This is because you can get cheap staff nearly everywhere during this period of time. And when economy back on track again, your cheap staff’s value will be increased significantly as well. Yes! You should keep as much cash as possible (about 6 months of your personal income, which may provide you sometime in searching new job, if you were the next unlucky one.). But, please don’t keep too much cash just because of you are scare to buy! If you can afford, just go with it. You will still in negative return even you have your money in place with time deposit account ( fix deposit account), due to the negative interest rate that we are having right now.

2. Pay off as much of personal loans, private loans, as debt collection will be hastened. 
Because it is causing every organisation to restructure and cost cutting measures are being put in place. This could eventually result in manpower reduction. With that, some will lose their jobs and those left behind will need to do extra work without any extra pay. That’s y just try your best in cutting down your personal financial liability. This is very important even when economy is growing fast. And the reason is, as long as we are with liability in personal financial, it will caring the meaning that we are using our future money in advance and our future real income will be significantly been deducted as well. Due to a partial of our future income will not become our ability to spend in future.

3. Sell any stocks you can even at lower prices. Take money off from Trust Funds. 
If that invested company is lack of any future prospects..
= Cut lost since you already know that you will end up with nothing at all.

If there is a sign for the company share value to dive for such a time…
= Get out with $ and wait for a dive of the share value… yet use the $ to re-enter the stock again… with such move you can get more shares than just keep holding ur share from the beginning
If that invested company is ‘nearly impossible’ to file bankruptcy, consider to add more share/investment with lower rate to move down ur average cost of invest..

4. Don't believe in huge sales forecast from customers, be extremely prudent, lowest inventories, reduce liabilities. 
We shouldn’t always following such a forecast always… but we should explore ourselves widely with forecasting from as much sources as possible … yet make an own conclusion and judgement.. Believe only urself … because the money is urs…

5. Don't invest in new capital. 
Cause we dun consider any new investment in capital market during uncertainty time… take ur bucks and wait … till everything get to the bottom and you will get the best deal ….

6. If you are selling homes/ properties/ cars , do it now, when you can get good prices, they are going to fall. 
Crisis need time to recover… 3-5 yrs for a middle hurt… 5-10yrs for deeply hurt… unless you can make sure that ur cars… properties will still look news or consider high-tech or advances after 5 or 10 yrs…

7. Don't invest in new business proposals.. 
Eco crisis = cut down of consumption power… business revenue will have lesser expectation.. 

8. Cancel holiday plans using credit cards. 
Not only for holiday but also cut off of unnecessary spends.. 

9. Don't change jobs, as companies will retrench based on 'last in first out'. 
Its hard to find ur value within an uncertainty market scenario. And your royalty might reward you with bonus if your company back in earning big bucks after years.

10.If Bear Stearns can fall, so can JP Morgan, HSBC, and the whole world. 
Banks in U.S and Europe are far more venerable than Asian.. This is because their margin of loan can up to 30-50 of their depositing... And loans among banks are common within these countries.. Due to lower saving rate among the residents within these countries, their customers deposits just not enough to cover their need… that’s y when such a big bank collapse.. Its will definitely affect the rest of the banks… This is what exactly happen right now in us and Europe
Unless those Asia banks who purchased lots of those bankruptcy banks bond will be affected badly… Otherwise, (especially in Malaysia banks) will have not much direct affection from those western banks crisis…

11.US economy falls, the rest will crumble. India and all those self economies will be the most protected, but not gullible. Europe may be a little stronger, but not China, another giant! Malaysia will see significant impact
US are the world biggest consumer.. Without them ours exports goes no way else… that’s y so far I really feel that internal consumption power are important, and a country should not too dependence on just exports to move its economy growth….