In the light of the UK’s high inflation, local independent financial adviser, Becky Hammonds of Willow Financial Solutions, looks at some straight-forward ways of recession proofing investments.
Uncertainty about the future of the economy is sure to have an effect on share prices. However, there is no need for investors to panic. Instead, it is a good time to review your investment portfolio and ensure that it is positioned to weather any economic storms.
Recession proofing is not about making sweeping changes, instead it will involve small, sensible incremental changes that will provide additional strength to face the challenges ahead.
1 Diversify. Different asset classes will perform well or poorly at different times. If you have a good spread you will limit your exposure to the poor performance of a single asset class.
2 Look further afield. Look beyond your home market and consider investments in countries that are well placed to withstand any economic downturn in the UK.
3 Become philosophical and take the long view. Be in it for the long haul.
4 Quality. Look for quality companies to invest in. During recessions and stock market downturns, high quality established companies usually bear up better than more risky operations offering what appear to be high returns. Is your portfolio overexposed?
5 Cash is not necessarily best. During economic uncertainty, it is tempting to opt out of the stock market and take the perceived safety of cash. This strategy is very risky; stock markets can recover quickly with little warning so you risk missing out when prices do start to recuperate.
Consult an expert financial adviser and get their view on your portfolio. Take time out to discuss your situation and your needs with an independent financial adviser who can assess your portfolio and direct you on the best path to take.
For more information contact Becky Hammonds on 07969 269677 or email becky@willowfs.co.uk.
