It is never too early to start planning for the future. With all of the uncertainty in the economy and markets, starting to think far into the future is never a bad idea. The Centre for Economics and Business Research (CEBR) estimation is pessimistic about the economic status of countries. According to the Bloomberg report, CEBR estimated that the world would experience a situation of recession in 2023.
And while you don’t want to over-plan or try to anticipate every possible scenario, there are some smart strategies you can apply to maximize your investment returns in 2023 and beyond.
Pay down your high-interest-bearing loans
To curb the economic inflation in the country, the central bank takes monetary actions like hiking repo rates and Cash Reserve Ratio requirements for commercial banks, making it difficult to take further loans. When the RBI or central bank increases the interest rates, commercial banks shift it to the end consumers only, which will increase your financial burden eventually.
Clear your credit card bills
When you pay off your credit card bills on time
• Your credit score may get improved
• You will be eligible for more credit availability
Also, suppose you miss your credit card bills amid the recession. In that case, you might pay high interest on credit at 2%-5% per month and cannot take advantage of quick money through your credit card in an emergency, as taking loans from banks will become much more difficult.
Invest in debt instruments as well
As we had already observed in the 2022 economic crisis, fixed-income securities became much more attractive when stocks were not performing well and giving negative returns. The interest rates in these instruments have gone up in the last few months. Experts expect a muted interest rate hike this year. So, this might be the right time to invest in debt instruments and lock in the attractive interest rate if you don’t have any debt investments.
Health insurance
The primary reason why insurance is said as protection rather than an investment is that they protect you and your family during your tough times. Insurance lets you access money when you need it the most. When you get sick severely, you might be able to collect all the funds immediately for meeting hospitalization expenses. Health insurance reimburses all medical and hospitalization expenses when you fall sick. You do not have to compromise your health due to a lack of finances. The Covid pandemic has made us realize the importance of health and life insurance.
Funds for your needs
Besides putting yourself in survival mode, if you put aside an expected amount of money for your essential expenses like tuition fees of your children, routine monthly expenses, your family’s regular expenses of medicine, and others, you will be able to maintain your financial harmony. By doing this, you do not have to worry about expenses. You can focus on your savings and investments. Also, you do not have to liquidate your investments in a financial crisis when you have allotted all the expenses.
Conclusion
Making financial decisions by taking your current financial situation is necessary more than other personal financial aspects. This helps you understand what you can do and can’t. There is nothing you cannot manage on your own. All you need to have a realistic mindset to achieve your objectives during economic disturbances or recession.
