Let’s face facts; things aren’t exactly hunky dory when it comes to the economy. But it can’t all be bad news, can it? A slump in the economy encourages other markets to rise. The only problem is, the markets that grow may not necessarily be of interest to you, or be something that you want to invest in, or need. Of course, if you look on the bright side, a savvy investor can make a killing in a dry market.
As the economy languishes in a constant flux of ‘will it, won’t it get better’, read on to learn about the areas that grow when the economy flounders. If you’re smart, you can make some cash by playing the odds and avoid the pitfalls along the way.
Want to know why you keep seeing those television advertisements and billboards that want to turn your gold into cash? Well, as the economy and value of paper money decreases the value of gold directly increases. This so-called “unwanted gold” that you have lying around your house has just shot up in value. As central governments print more paper money than is demanded (to keep things floating) the falling confidence on the market of this paper money is directly related to the rising price of gold. Wise financial analysts who predicted the financial fallout told savvy investors to invest heavily in gold futures and prices shot up as the majority of other stocks dropped. We’re not suggesting that you invest your nest egg in a mine in a gold rich country, but investing in gold futures is not a bad idea. However, it’s important to be aware that you will need to get your cash out quick as the economy improves.
It’s is impossible to shine a positive light on unemployment in present financial climate. Regardless of the industry you work in, the desperate glare of the economic microscope is brought into focus. It’s not just companies who make big losses laying off staff. Typically in a downturn cuts are made across the board as companies streamline staff to cut back on costs. And it doesn’t seem to matter whether you’ve been working at the company for a year or three decades, or even how good you may be at your job. When the economy is in crisis everyone’s jobs are at risk. If you’re one of the recent unlucky numbers of forced redundancies make sure that your company has the legal right to let you go. But it isn’t all doom and gloom, sometimes a forced redundancy can be exactly the kick up the backside needed to progress your career along the right tracks. As the economy improves you will find yourself back in work.
3. Sales of Anti-depressants
The pill-for-every-ill society that we live in teaches us that escapism is the easiest option when dealing with depression. Since financial woes are a key, and sometimes overwhelming, snapping point associated with depression, it shouldn’t be surprising that with the economy down the sales of depression-related drugs is sky-rocketing. In fact, in the UK alone the cost of depression on the economy has risen to a staggering £8.6 billion pounds a year. If you’re on, or are considering antidepressants, in whatever form, make sure that you do your research on the many options available to you before you start a habit that you may find incredibly difficult to quit.
The subprime mortgage crisis in the US ruined it for all of us. The fact of the matter is that people without any real assets were allowed to leverage a house against thin air. The eventual federal takeover of Fannie Mae (the largest mortgage lender in the US) burst the housing bubble across the globe, and the value of homes spiralled downwards. This meant that rentals increased dramatically, because those who had lost their houses, or those unwilling to take the chance on investing in the housing market, went for the safe option. Unfortunately, the problem with renting a place is more than obvious – effectively you are paying off someone else’s mortgage while you live in their home, and when your time runs out and you move on that money is gone. And, with mortgage lenders now unwilling to lend to first-times buyers without massive deposits, it seems that many people have no option but to rent.
WHAT GOES DOWN WITH THE ECONOMY?
With the economy down, unemployment up, job stability low and anti-depressants rendering sex drive obsolete, you would think that the number of pregnancies should drop. In the 1920s, before the depression in the United States, women went from having an average of three children per household to two a decade later. Children are the biggest investment that you are ever likely to make and probably the most expensive one, so most couple’s find it safer to wait for economic reassurance before starting or building onto a family. However, reports over the past few months indicate that the sale of pregnancy testing kits has more than doubled; leading speculists to think that there will be another baby boom similar to one after the recession in the 70s. It’s thought that because people can’t afford to go out so much, they’re making their own ‘entertainment’ at home. And because more women are unemployed or may be soon, they’re seeing the break in their career as a good time to start a family. Guess it’s each to their own.
2. Interest Rates
Across the world, governments are cutting interest rates dramatically. But what does this mean for you as a consumer? Basically it means that all your financial burdens should be lightened. Your mortgage rate is likely to drop, the interest on your credit card will fall, making repayments cheaper, and if you’re cash-rich it is a better time than ever to invest in property at a fixed-term low rate. However, and it’s a big however, all this depends on whether your banks/mortgage companies pass on the interest rate cut. Many have decreased it to a level that customers are seeing a good drop in their outgoings, whereas other lenders have reduced their rates marginally, leaving some poor unfortunates with hardly any reductions. And while interest rates are low to encourage spending, it doesn’t give you carte blanche to accrue more debt. Government stimulus packages are designed to get you spending what you would have spent in better times – not spend more.
3. Tax Revenues
The pesky tax man is turning his pockets inside out because tax rates are dropping to amazing new lows. In February this year, Australian Prime Minister Kevin Rudd claimed there would be $115 billion dollars wiped off tax revenues, while in the US Obama’s disputed health care program is starving due to a predicted 22% drop in income tax receipts. This means that you will have more dispensable income, but the problem is that when things improve these starving governments will come with their hands out and the citizens will be footing the bill… again. So, the best advice is to enjoy the tax breaks while they last, because they certainly won’t last forever.
Post written by: Joseph McCullough.