Given all the market losses most of us investors have experienced in the last year, it’s all too tempting to hide those financial statements your advisor sends in a drawer. You might even be thinking about pulling your money out of investments altogether and just plain hiding it under your bed. But don’t let all the bad news get you down – there are ways to make the recession work for you and your portfolio. Here are a few opportunities to get ahead in tough times:
Sin stocks and other sexy sectors
If you have money to invest in stocks, there are some bargains to be had. As gun-shy investors take their money out of markets, there are opportunities to make money on undervalued stocks. Companies in a few “recession-proof” sectors are worth keeping an eye on – health care for example is an area where demand doesn’t slow down with the economy. Food is also something that people always need, no matter what the economy is doing. In fact, some grocery store chains have done particularly well as consumers tighten their belts and cook their own meals to save money. And don’t forget those sin stocks – alcohol sales tend to rise in tough times as people steer clear of bars. And if you’re keen on reducing your carbon footprint, U.S. president Barack Obama’s green agenda might just help you boost the green in your bank account – the push for clean fuel technologies is going to take investment in companies that can help reduce greenhouse gas emissions through new, clean technology.
If you have a financial advisor, then you need to sit down and make sure your current portfolio is balanced properly. There are some experts out there who say stock market returns will be pretty low for the foreseeable future and that we’d better get used to volatility – that could be a toxic mix for you depending on when you’re planning to retire or when you need to access your money. Are there more defensive ways you could be invested?
Go for the low interest rates
Low interest rates also mean opportunities for you to rebalance your finances – think about negotiating a new mortgage rate for example. Or if you have debt, now’s the time to think about renegotiating your payment terms at lower rates. It might also be a good time for you to consider borrowing to invest in your RRSP come tax time. You can use your tax return to pay part of it off.
Fix up your place
Finally, don’t forget about one of your biggest investments – your home. This year the Government of Canada is offering a renovation tax credit – you can get up to $1,350 back on renovations done during the 2009 tax year.
So fear not for your financial future – take the reins, call your advisor and make sure you’re poised to ride out the recession with the least possible anxiety!