Undertake Investments During Recession Essay Example | Topics and Well Written Essays - 500 words

Undertake Investments During Recession - Essay Example Opportunities arise during periods of recession. Many countries experience what is known as ‘liquidity trap’ that develops due to low-interest rates. In reality, near-zero interest rates do not stimulate the economy. At low or near-zero interest rates, firms and consumers should borrow and spend. However, many firms, groups, and individuals focus on either saving or paying debts rather than spending during recession periods. For this reason, near-zero interest rates have less effect on investment and consumption behavior (Bivens 1). As a result, the client should invest during the recession due to the availability of many investment opportunities. Buying assets during recessionary period reduce one’s spending. A potential investor should invest during the recession. The government and individuals sell assets in the recessionary period. For instance, stock prices reduce significantly. Additionally, bonds, real estates, and mutual funds become readily available. Ind ividuals also sell their private businesses at lower prices. For this reason, due to the unfavorable economic environment, investors dump their assets and one can decide to pick them at lower prices. However, investing during the recession requires courage and paying attention to market performance (Bivens 1). The investor should wade through the market by undertaking the mandatory dollar cost averaging plan. The plan ensures that the investor does not spend or pour all capital at once. During the recession, many people lose hope and faith in their government practices. Millions of workers lose jobs while the media spread inaccurate information regarding economic recovery issues. It is paramount for an investor to consider financial education so as to understand the performance of financial markets. Developing and marketing personal brands is another critical area that needs consideration.