Thursday, March 22, 2012

How to Stay Afloat During a Recession

How to Stay Afloat During a Recession

We're living in recessionary times. But that doesn't mean that you can't get ahead. This article gives a few tips on how you can profit from the financial fallout.

Instructions

    1

    One of the most obvious defensive strategies that you can practice is to keep your credit score high. Use your bank or credit union's automatic bill payment feature to avoid late payments. Opening a new credit card account can add points to your FICO score. Keeping your total revolving debt below 35 percent of your credit limit can add as much as 50 points to your score as well.

    2

    Recessions usually mean buyouts and corporate mergers in the financial industry, therefore, your investment or insurance accounts may suddenly become the property of a new broker and/or company. If you suddenly find your accounts under a new advisor's name, then you need to check that person's regulatory history either at finra.org (see Resources below) or with your state insurance commissioner.

    3

    The recent mortgage fallout has created some buying opportunities in the financial arena. Banks and other lenders who have maintained strict, conservative lending standards have seen their share prices take a beating. However, the underlying companies are still solid. Bank of America is a prime example of this.

    4

    Conversely, those seeking investment alternatives outside the stock market may want to consider becoming mortgage lenders themselves. Find a borrower that you feel is financially reliable and trustworthy, and make them a loan (properly documented and enforceable in court) at slightly above-market rates. You can get a guaranteed return on your investment and have the home as collateral to boot. For more information on this, see my eHow article: "How to Profit From an IRA Mortgage Investment."

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