8 tips for investing in hard times
The economy occasionally heads south. When it does, you have to take a close look at your finances and review, regroup and perhaps recoup.
Real estate in many markets
has lost its luster. Bonds are either mired
in controversy or priced at levels where it's
hard to imagine much of an upside. The yield
on cash investments has trended lower with
the Federal Reserve's steady easing of its
targeted federal funds rate
from 5.25 percent in 2007 to 2 percent in
April 2008. As for stocks, well, stocks have
been bouncing between the promise of a new
tomorrow and the fear of facing tomorrow.
What's an investor to do?
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| Definitions |
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Federal funds rate -- The short-term interest rate that banks charge other banks to borrow money overnight at the Federal Reserve. |
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Despite past rate cuts and the federal stimulus
checks that went out beginning in April, it
appears that the U.S. economy is running scared
of a recession.
Since we won't know we're in
recession until the economists at the National
Bureau of Economic Research, or NBER, tell
us we're in a recession, it makes sense to
think through how we're invested and changes
we can make to improve our portfolios or finances
now.
To that end, Bankrate has asked a group of investment professionals and investment journalists to weigh in on how an investor should prepare for or invest in hard times.
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| 8 tips to shape up your finances |
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1. Pay down loan balances and earn a guaranteed return
 Not all financial moves you make when you expect hard times relate to your portfolio. Taking some steps to manage your spending can help you position yourself to survive a financial setback such as getting laid off from your job.
William Suplee IV, CFA, CFP,
president of Structured Asset Management in
Paoli, Pa., suggests that, "In difficult economic
times, often simple things can make large
improvements to your personal financial situation.
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