Tips for Recession Proofing Your Portfolio

Anti-Recession Tips for Effectively Shoring Up Your Portfolio

The economy can be hard on your portfolio.  This has happened before and it could happen again.  Now that we’re officially in a recession, what better time to pump up your resources and shore up your portfolio than to make it recession-proof now or at least weather the tough economic times?  Here are some anti-recession tips you might want to consider:

Aim for quality.

If there’s one thing that markets abhor, it’s uncertainty.  This is especially prevalent in the way investors behave when faced with companies that produce predictable figures.  This is also the reason why investors are loathed to take chances on companies that don’t perform as expected.  These companies are usually the small ones, ones that need investors’ faith the most.

To start shoring up your portfolio, try to avoid companies that will rely heavily on you, the investor.  It will be easier for you (and safer for your investment) to rely on companies that more or less show predictable growth because this points to better earning quality.  Opt for these companies instead – these are usually large firms, big players in an industry that have proven staying power regardless of the economy and have plenty of money to continue to run, do business, pay debtors, produce and make their investors happy.

Invest in health care.

Take your pick: drugs, medicines and pharmaceuticals or health services.  Whichever way you go, you have a better means of shoring up your portfolio if you put your faith on this sector that continues to enjoy a healthy performance.

And it shouldn’t surprise you one bit: what the health care industry can offer is a staple among consumers – good health and a means to cure.  Unless someone comes up with a miracle cure soon, the health care industry will continue to thrive.  Until then, this is one more segment of the market that you might consider putting your faith on.

And yes… the fact that certain segments such as pharmaceuticals pay a lot in terms of dividends doesn’t hurt.

Stick where the crowds are.

By crowds, we mean consumers.  Consumers are the lifeblood of economies.  Without their support and willingness to spend, economies can crash and burn so easily.  As an investor looking to shore up your portfolio, here’s an anti-recession tip for you: invest where consumers bloom.

This means putting your money on industries that cater to the most basic of consumer needs, such as food and beverages, personal care and household needs.  Other than the fact that consumers have been proven to continue spending for basics even during a bad economy, these industries have also performed well during less-than-ideal economic times in the past.  You’re less likely to experience disappointment if you go where consumers go.

Diversify.

Recession always brings out the worst – and best – in people, especially investors.  Which way you wish to take is really up to you.  However, wouldn’t it be better to view the recession as an opportunity to find other means to make money?

If you want to shore up your portfolio and avoid the negative effects of a recession, consider diversifying.  But do so only by carefully considering the pros and cons of the industries that you wish to invest in.  Focus on industries that have behaved so well under pressure, particularly those that continue to stay steady even during a recession.

Related articles

• INSTANT MBA: You Can’t Be Recession-Proof, But You Can Be Recession-Resistant (businessinsider.com)
• Recession Got You Off Balance? (prweb.com)
• Simple Ways to Recession Proof Your Home (taylorbrownrealestatetalks.com)
• Tips for Buying Property During a Recession (taylorbrownrealestatetalks.com)

It Is A Good Time to Refinance

Good News in This Economy

According to CNNMoney.com’s article http://moneyfeatures.blogs.money.cnn.com/2009/02/13/how-to-score-a-low-rate-loan/ it is a great time to refinance.  With the falling interest rate, you can save thousands on your mortgage. 

Caution on Your Refinance

The article goes on to caution the consumer that because everyone is trying to refinance at the lower rate it may take a lot longer to secure the lower rate because it is taking longer to close deals.  However, Amerisave offers $1000 to the consumer if the loan does not close when promise.  In addition, Amerisave offer the lowest rate and fees guarantee or Amerisave will pay you $500.

AmeriSave.com

Good News, Investors

The flipping rules have been relaxed until June 2009.  Until recently, an investor has to wait 90 days before the investor could resell a home to a FHA buyer.

The reason for this change was because investors are helping the economy by repairing the large number of foreclosed home thoughout the country.

According to the FHA, “under the revised policy the purchasers will have to be financed capable to handle the mortgage and underwriters will talke a hard look at the appraisal.”  As a result of the changes, the FHA will not be, or at least for the time being, turning down mortgages because the previous owner owned the property for less than three months.

Good Indication that You Need to File a Property Tax Appeal

It is often difficult to determine the indication of needing to file a property tax appeal, but there are signs.

The following are a few good indication that a property tax appeal is necessary:

• One indication is when the description of the property does not match.  An example of such an error is a town home being labeled as a single family home.
• Another indication is when similar homes in the area sell for less than the assessed value.  Incidentally, most states, including Indiana, use market value or some variation of market value to determine the assessed value.
• Still yet, another indication of a need for property tax appeal is changes in the environment.  Change in environment includes rezoning, heavy traffic, drainage problems, building of new industry, freeways, or toxic waste in the neighborhood.
• Another indicating factor is the condition of the property.  If the property is environmental obscene.  The obscenity includes the roof needing replacement, inefficient heating, structural cracking, deterioration , and/or chronic defects.

It is important to not that every year is not an assessed year, but that does not preclude you from filing a property tax appeal.

It is equally important to note that any time an economy is plagued with foreclosures, short sales, and homeowners seeking bail out of homeownership are all good intentions that your property tax bill need a review and may be an appeal.