How Your Private Practice And Wealth Can Profit In A Recession

Hello, this is Gemma at Clinic Alchemy, the Alchemist to give you great tips on how to manage and grow your wealth.

There has been a lot of noise recently about a recession on the horizon. A recession is a natural part of the economic cycle, it will happen at some point. But there is no need to panic, actually you can even profit from a recession! So today I’m going to give you some simple tips on how to weather the storm and even get a bit of growth from it!

* Get your ducks in a row

* In a previous vlog I spoke about the ABC of financial planning. If you haven’t heard it, I’d suggest you go and listen to it. For those that have, to recap, make sure you have done the following;

Have a clear understanding of how much you and your business earn and spend each month
Set aside a monthly budget for financial planning
Pay off unnecessary debt Have sufficient money in cash to cover unforeseen expenses (at a minimum 3 times your monthly income), plus cash required for large expenses in the next 3 years.

Cash savings

Make sure you only have £85k with any one bank. If things do go horribly wrong and your bank fails and can’t repay your money you are only covered by the FSCS by £85,000. So if you have cash of more than £85,000 make sure it is deposited with more than one bank.

Investments

Review your investments.

Make sure they match your attitude to risk and time horizon.

If you feel you need money from investments in the next 3 years it may be time to de risk some or your entire portfolio.

You could also look to do the following;

  • Change your investments that are susceptible to price falls. Buy defensive companies that do well in a recession
  • Alternatively buy funds that are designed to be defensive, sometimes referred to as absolute return funds. However the opportunity cost being that they tend to sacrifice long term growth.
  • Buy the dips

If you have surplus cash that you do not require in the next few years, grab the chance to buy when prices are low!

Do nothing and ride out the storm

Just sit tight and ride it out. Those that invested just before Lehman’s went bust (cited as the start of the 2008 crash) would have still seen investment returns within 3 years. In fact, to date the FTSE 100 has done over 70%!

Don’t try to time the market

None of us have a crystal ball we don’t know when the peaks and troughs are going to be.

  • Make sure your portfolio is well diversified.
  • If investments fall in value, seek some advice, review and monitor the situation. Don’t panic and sell into cash unnecessarily.
  • Finally you could even look to be a bit contrary… be a buffalo in a Tennessean storm and run though the storm!

So there we have some simple tips on how to weather a recession and even profit from it! Personally I think I’ll be a buffalo! If you like what you have heard give me a thumbs up and get your ducks in a row!

I’m at gemma@clinic-alchemy.com

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