Managing your stock portfolio is tough even during good times. When the economy is suffering a downturn, keeping your stock portfolio healthy can be an absolute nightmare. However, despite the economic weather, there are things you can do to help make it through the storm without watching your assets blow away.
Do Not Panic
It is easy to understand why some investors panic when they see stock prices plummeting. That being said though, you do not want to let fear guide your decisions. If you invested in a company with a solid history and you can afford to hold onto the stock, you are better off to hold it and wait for an economic rebound. If you sell prematurely, at best, you give up money you could have made; at worse, you take an unnecessary loss.
Find Stable Commodities
There are certain things people are going to need no matter what. Even in cases of pay cuts and job losses, people still have to eat. Toilet paper is another example of a consumer good that people cannot just give up. In some cases, demand for certain brands can even go up. For example, consumers may be likely to buy more Maxwell House coffee when they no longer have enough money to make regular trips to Starbucks.
Focus on Liquid Assets
If an investment goes sour, which is more likely when economic times are rough, you may need to get your hands on cash quickly. There are other reasons to keep cash, or the rough equivalent of cash on hand such as if your stocks drop in value, but you do not want to sell them at low prices. Having assets you can easily liquidate on hand gives you some financial cushion.
Look for Moneymakers
This may be easier said than done, but one of the best ways to protect all your hard work is to make sure that you have as much money coming in as possible. The last thing you want to do is sell off commodities at ridiculously low prices just because you cannot pay your bills. Start looking into high-dividend stocks and other investments that will bring in some steady extra income.
Consider Foreign Investments
Just because the economy in your country is in trouble that does not always mean the global economy is doing as bad. Emerging markets in developing countries can be a chance for investors to make some profitable overseas investments to make keep their financial portfolio in good shape until their domestic investments recover.
When the economy is bad, everybody worries. When you are an investor, your first instinct is to protect the wealth you have worked so hard to build. This is a natural response, but you cannot allow it to prompt you to make irrational decisions. When times are tough you do have to work harder, but with due diligence, you can minimize your losses even during rough economic conditions.