From side hustles to refined investments, strategies to ride out the recession

If there’s one thing that a black swan event such as the pandemic has taught us, it’s that job security and income levels can be affected at any time due to factors beyond our control. The recession isn’t entirely unpredictable, and this allows young professionals, entrepreneurs and investors to prepare for the coming storm. Saving up is the first thing that comes to mind when you look for a cushion when financial instability hits, but there’s a lot more than can be done to navigate the crisis.

Stronger assets, lower risks

On the investment front, stay away from panic selling as stock prices are being bogged down by the recession. Just take your time to make sure that you have a portfolio of high-quality equities, and prepare to make it through headwinds with them. By doing so, investors don’t lose assets that can ensure a better return once turbulence ends, and their wealth isn’t dented permanently. Hence, this is also not the time to experiment with new names, and one should keep IPOs and small-cap shares at bay.

Going for diversified mutual funds through systematic investment plans (SIPs) is a safe option during economic turmoil, to make sure that you have assets from different sectors. Industries such as FMCG and pharma are more likely to hold their ground when a recession shakes up the markets, and firms with a huge debt or those which are overleveraged are a big no.

Make big plans for a recovery

One more strategy is to invest at regular intervals in tax-deferred accounts or trusts, known as unqualified investments, to protect your cash till the markets recover. Assets such as exchange-traded funds, which pool stocks and commodities, as well as those that pay dividents are also good investment vehicles on the road to recession.

Supplement your income, hold your job

The World Bank has warned of a recession on the horizon, as global banking regulators are increasing interest rates that will make borrowing a costly affair. Although the great resignation has seen high attrition rates up to 20 per cent in India, staying in familiar territory is a better option before a slowdown hits the job market. Instead of quitting or switching jobs, young professionals can earn extra through a side hustle or moonlighting, which can be a part-time opportunity or freelance projects to utilise extra hours.