Thursday, February 7, 2013

How Financial Plan Help you in recession

Normally, people will be difficult live in recession. They could be fired by the company because the company may not need them again. They will difficult to make money while they should still spend money. Finding a job is not an easy jobs. The employee demand low but he supply is so high. Most unemployed want to get jobs. I saw some doctoral degree offers themselves to work for food only. It is a pitiful story. Getting doctoral degree needs much money but they just get food. The recession makes us suffer.
However, Some people can get benefit while in recession. They are clever to create the financial plan. They can stream more income while other people are very difficult to get one dollar. Her are how financial plan help us in recession:

1. The financial plan has planned to create a good portfolio
Some people who own gold bar, gold coin, silver and other precious metal can make more money. The gold price has hit $1700 troy oz and it could hit $ 2,000 anytime. The people must be more wealth than before.
We invest in various investment both real asset and financial asset. Land and property is also good investment now because the price never decline. Some investor sells the stock and use the money to buy land or property. Though the stock return is not good now but you do not have to sell the entire stock. You have better keep the best stock. When the economic recover, the stock will increase and you will get high return.
2. The investment portfolio
The financial plan does not invest at the capital market agressively. Due the recession, they invest few stock only. They reduce the stock in their portfolio except some defenssive stock that can make money. The defensive stock including food company, retail company, and others. People still use soap or tooth paste even the economic is very bad.
The best portfolio may no give you much money at the recession time; however, the investment also gives return too.  We should be clever to construct a good portfolio.
We invest money to cumulate money that we need it at the future. We can use the money when the kid goes to university.
3. Own house
The house price has been decreasing since the subprime mortgage. The decline price is almost half of previous price. You can settle the mortgage immediately if you have money. By owning house, you do not have to pay the mortgage or pay the house rent. You do not have to move from an apartment to another apartment.
Owning some house can increase your wealth too. Some people buy the cheap house for business. They repair the house and paint the house. They sell the house to any people who hunt a house. You can also rent your apartment to student or worker.
4. Own crop and farm
People need food and beverages. If you have so much crop that produce abundat wheat and oat, you can make money. People need wheat and oat for bread and bubur. In the recession, they may reduce the cereal but they cannot avoid to use it.
Financial plan also suggest you to buy the productive property. You can buy it cash or you save first to buy the land. The price for land increase yea o year. You will no sorry if you buy the land. Surely, you have to research the land first and make sure the certificate of the land.
5. The credit
I do not like to owe money. In recession, the interest rate lows. The government want the businessman borrow money to operate the company. With the interest rate near zero, you can slash the company spending or cost. However, most businessman has no money so they cannot borrow the money thought the debt at zero.
Personal finance plan teach us not to borrow money. We can calculate the profit and the loss of credit. We should pay more cash by using credit. We are better save the money to buy something than credit to buy something. I must be cheaper but I need good commitment. If you use the money you will not be able to buy the item.
6. Retirement fund
If we contribute the retirement fund dozen years ago, we can get benefit now. The retirement fund help when we loss the jobs. You can use it to found a new business or build a crop farm. A personal finance also suggests us to allocate money for retirement fund because we cannot work forever. The company will retire the old man because they are no productive again. By using old man, the productivity of the company goes slowly.
The financial plan counts some money hat you will receive after you do no work again. Of course, it also consider your lifestyle. For employee they may save 10% of salary for retirement fund. On he other hand, a man without a fix jobs such as freelances should put more than 10%. They may put 15% for the retirement.
When they retire, they receive payment from the retirement fund. The amount might be similar to monthly payment. They can live without work. They can buy food, cloth, and other item and they can stay in their house comfort.
7. If you saves 10% of your paycheck as you have planned in your financial plan, you can use the money now. Saving is important thing. You can use when you use money immediately. Sometimes we face with unexpected expenses. Perhaps our car his garage and we should repair our car. We can use the saving first.
A recession time, we should expense more money because the price of things increases. We can use your saving to cover our spending. Off course you should consider to reduce your spending or increase your income.
Financial plan help you to live below our mean. We should have commitment to obey the financial plan. Spend wisely and increase your spending to reach wealth.
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