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Recession Proofing

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The past will be a lesson, the present is an opportunity and the future is a dream!

That’s how I see the current global recession which is touching most of the lives on this planet. Few will be lucky to survive the downturn, but for the rest it’s each individual for thee where one will end up struggling until the gloom is lifted off.

So where does it all start?

Perform a search on your favorite search engine for “global recession” and you’ll get back 100’s of articles outlining the crisis. The one that grasped my eyes is http://en.wikipedia.org/wiki/Recession, here there is an history which clearly depicts the way things have gone since ages. One such thing is ups and downs, and that goes well with the saying, what goes, comes around. One of the observation that is lead me to think about the down turn is the return of “the recession” on an average every 9.4 years in the US [since 1797] and every 10 years in the Europe [since 1880]. The trends gets interesting especially between 1920-present. Each recession (what ever you can term it – economic depression, recession, unemployment blah, blah, blah) it has lasted at least for 2 years on an average.

Most of the recession has been led by US causing Europe to panic during these times, and today we have a global one that touches each country. Refer to world recession map [Year 2008] http://en.wikipedia.org/wiki/File:Recession_2008.png, virtually it touches most of us. Now finding out why this economic problem comes over and again is not in my power, there are great leaders who are acting upon it to control the menace.

What I have to share is a thought (Simplicity of life): History:

  1. Recession (I will call it downturns in what ever form they occur) occurs on an average 10 years
  2. They last for at least 2 years on an average
  3. Because of globalization, it affects each of us – blame it on coupling of world economies.

Action Plan

Quick Recovery

  1. Reduce spending on luxuries – blame it on recession – everybody will have to bring down operation costs – be it business, personal or national
  2. Strictly avoid speculation; however there will be some strong business to invest it – do research and buy them (stocks, companies).
  3. Pay off unwanted debts – High interest credit cards, loans; Use your assets to get mortgage on low interests.
  4. Work and do your business smartly – look for opportunities.

Long Term preparation (Since the cycle repeats too often)

  1. Have Sufficient Savings each year – this will help one to fight tough times. Usually buffer of 6x earnings should help in tough situations.
  2. Accumulate immovable assets – Gold, Land, Silver (Money is literally virtual, it is not guaranteed, nor can be guaranteed by anyone, they worth nothing over long time frames)
  3. When everybody is buying assets, stocks – You sell yours: When everybody is selling, you buy them.

I believe strongly in the above principles, they have been my guiding force since a decade, and I hope it benefits other individuals like me. If there are any thoughts that you like to pour in, please do let me know.

Disclaimer: What ever I have expressed here is just my personal thoughts.

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One thought on “Recession Proofing

  1. Thanks Uday for very helpful tips.
    Good show !! Keep writing.

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