Loding Loading ...
X
Century Financial Consultancy LLC ("Century") does not offer investment advisory or portfolio management services nor guarantees investment returns. We do not accept or make payments in cryptocurrency or digital currency. Our official website is www.century.ae. Beware of fraudulent companies or websites posing as Century. We are not responsible for any losses from using fake websites or entities. Trading in financial markets involves a significant risk of loss which can exceed deposits and may not be suitable for all investors. Before you start, please ensure you fully understand the risks involved.

Wednesday, September 14, 2022

Prepare Your Finances for a Recession: The Stock Market Investment Edition

By Century Financial in 'Blog'

Prepare Your Finances for a Recession: The...
Interest Rate Hikes & Inflation - Correlation Explained

Amid the rising commodity prices, slow economic growth , interest rate hikes, and high unemployment , there is a growing concern that the world economy is heading towards a recession. The war in Ukraine and supply chain disruptions have magnified the risk for stagflation - an economic event in which the inflation rate is high, economic growth slows down, and unemployment remains high.

The World Bank, in its latest Global Economic Prospects Report, forecasts global economic growth at 2.9 percent, down from 5.9 percent in 2021. This slump is expected to continue over 2023-24 as the war in Ukraine and damage from the pandemic disrupts financial activity, investments, and trade.

Goldman Sachs puts the probability of a recession in the United States over the next year at 30 percent. On the other hand, UBS predicts that there will be an economic slowdown but not enough to tip the economy into a recession.

Whether a global recession is near or further away, here’s how you can prepare for it.

A diversified portfolio of safe fixed income options, equities, alternative investments, and private equity can provide the most protection against an economic downturn. When you distribute your stock market investment across a variety of asset classes, company sizes, and locations, you will be able to minimize the impact of the asset value going down and prevent serious losses during a recession.

Even during a recession, consumers will continue buying essential goods like food, toiletries, and medical supplies. Due to this reason, companies selling consumer staples remain resilient during stagflation. While this industry will also suffer from the effects of the recession, this sector is considered a safer bet among equities.

One of the most significant steps you can take to thrive during a recession is moving a portion of your fortune to cash. Access to liquidity will give you the purchasing power to snap up bargain stocks before they can rebound. A healthy amount of cash and bonds with short maturity periods can mitigate portfolio risk and offer protection as the market declines.

US Treasury Notes and Series I Savings Bonds will give you solid returns on low-risk investments . The Treasury Inflation-Protected Securities offer attractive returns and liquidity after 12 months. Series I Savings Bonds backed by the US government return the rate of inflation on an annual basis to protect their portfolio as commodity prices soar.

Gold is an asset for long-term investors seeking stability in a negative market environment . During periods of uncertainty, gold tends to outperform stocks. An allocation of gold in your portfolio could help you balance the overall portfolio volatility and performance.

When it comes to thriving during a recession, it is important to focus on the long-term horizon, limit risks, and set aside capital to invest during recovery. Taking a proactive approach and planning for a recession will help you come out of it in a stronger financial position than before.

It is advised to have a financial consultant by your side to navigate an economic downturn. Working with a financial consultant could help you easily bounce back from a slump and minimize losses through a planned strategy customized to your risk appetite and financial goals.

Century Financial Consultancy LLC (CFC) is duly licensed and regulated by the Securities and Commodities Authority of UAE (SCA) under license numbers 2020000028, 2020000081, and 301044 to practice the activities of Trading broker in the international markets, Trading broker of the Over-The-Counter (OTC) derivatives and currencies in the spot market, Introduction, Financial Consultation and Financial Analysis, and Promotion. CFC is a Limited Liability Company incorporated under the laws of the UAE and registered with the Department of Economic Development of Dubai (registration number 768189).

CFC may provide research reports, analysis, opinions, forecasts, or information (collectively referred to as Information) through CFC’s Websites, or third-party websites, or in any of its newsletters, marketing materials, social media, individual and company e-mails, print and digital media, WhatsApp, SMS or other messaging services, letters, and presentations, individual conversations, lectures (including seminars/webinars) or in any other form of verbal or written communication (collectively referred to as Publications).

Any Information provided in this publication is provided only for marketing, educational and/or informational purposes. Under no circumstances is any Information meant to be construed as an offer, recommendation, advice, or solicitation to buy or sell trading positions, securities, or other financial products. CFC makes no representation or warranty as to the accuracy or completeness of any report or statistical data made in or in connection with this Publication and accepts no responsibility whatsoever for any loss or damage caused by any act or omission taken as a result of the use of the Information.

Please refer to the full risk disclosure mentioned on our website.