After many years of excellent growth in the UK, the economy is now on the cusp of a recession. House prices are falling, the stock market has seen some trouble and the price of family staples such as food and petrol is shooting up. Despite this, there are ways that you can safeguard your personal economic situation and here are four useful tips to help keep your finances looking healthy.
1. Pay down your balances.
There’s never a more important time to pay down your credit card and loan balances than when you may be facing a job lay off or other financial hard times. This is similar to earning a guaranteed return, which is equal to the amount of interest you save by paying off a credit card or two. You may want to consolidate your credit card debt into one manageable monthly payment by taking out a loan.
2. Prepare for the worst.
Banks are not likely to loan money to people who have been laid off or are otherwise influenced by a trying economy. Set up a home equity line of credit now, while you are still able, and you’ll have access to the cash should you become unemployed. If you’re in need of finance, then Alliance and Leicester can provide loans at low rates, while taking a look at their loans calculator will help you work out what you can afford.
3. Buy stock.
It seems odd to buy stocks when everything is slowing down in the economy, but typically the stock market dropping is a sign of better times to come, and soon. Buy stocks now and you’re likely to experience a nice return when the economy takes a turn for the better. If you’re inexperienced in stock picking, then it is probably worth considering an ETF. These funds have low initial set up costs, and then they track the performance of a particular index.
4. Forget about chasing bond yields.In previous years, investors would abandon stocks and other investments in favour of bonds to try and ride out a recession or economic downturn. This time though, the stock market and economy is actually suffering due to problems in the bond market. Unless you are a highly skilled investor, it’s not a good idea to try and chase high yields sometimes offered with bonds