What is recession: Nobody can answer in more simple way than "5%", as if it is the first time recession is occurring in India.
Recession is two or more of consequent quarterly negative growth of GDP ( Gross Domestic production of Goods and services). Last recorded GDP is 5%.
What starts Recession: More than economic parameters , people sentiment also plays a role. It is like lean trot of Sachin Tendulkar. Class is always there but confidence and self belief is low. Global cues like war, trade war, American economy, Federal rate cuts all play a role. Nobody can deny demonetization also acted like a last straw on Camel's back. We are lucky in not facing recession often like US. After 2008 we are facing recession again.
What happens in Recession:
1. People sentiment becomes negative. They stop spending and start saving.
2. As we have changed to from saving to spending Economy, sales comes down resulting in poor growth or negative growth of companies.
3. Due to Liquidity crunch, banks are in problem and unable to lend.
4. NBFC are all beaten down due to lack of funds. Many of them may collapse. Eg: IL&FS, DHFL.
5. Lot of shutdowns and loss of jobs which further reduces purchasing power.
6. As people think purchase of car as luxury, automobile industries takes a greatest hit.
7. No takers for new houses, infrastructure takes a hit.
8. As people are conscious about spending FMCG ( fast moving consumer goods )takes a hit.
9. Recession lasts for 1 to 3 years, government should give lot of stimulus to come out quickly.
How to plan our Personal Finance:
1. Don't get panic " எப்போதும் போல இதுவும் கடந்து போகும் ". It is only passing event.
2. Never stop your SIP, never invest lump sum in Mutual Funds.
3. Go for safer bank deposits and post office and prime minister Schemes.
4. High time to invest in good shares. Choose companies with low debt and high free cash flow . There are the first to hit back.
5. If you are thinking of buying a house, this is the right time. You can do lot of bargaining with the builders.
6. Keep your investment in Gold. It will act like a hedge. When it crosses 40000 to 41000, you can book profit with paper gold.
7. Bond market will flourish. Avoid bonds that have invested in NBFC. You can also go for GILT funds( next 1 year it will give good returns).
8. Invest in Nifty beEs or similar ETFs during every fall of sensex. You will have handsome returns after 3 years.
9. Like Warren Buffett words , recession is also a way to transfer money from impatient to patient.
"வாழ்க்கையில் ஆயிரம் தடைக்கல்லப்பா
தடைகல்லும் உனக்கொரு படிக்கல்லப்பா
வெற்றிக்கொடி கட்டு
மலைகளை முட்டும்வரை முட்டு
லட்சியம் எட்டும் வரை எட்டு"
Aran..
Recession is two or more of consequent quarterly negative growth of GDP ( Gross Domestic production of Goods and services). Last recorded GDP is 5%.
What starts Recession: More than economic parameters , people sentiment also plays a role. It is like lean trot of Sachin Tendulkar. Class is always there but confidence and self belief is low. Global cues like war, trade war, American economy, Federal rate cuts all play a role. Nobody can deny demonetization also acted like a last straw on Camel's back. We are lucky in not facing recession often like US. After 2008 we are facing recession again.
What happens in Recession:
1. People sentiment becomes negative. They stop spending and start saving.
2. As we have changed to from saving to spending Economy, sales comes down resulting in poor growth or negative growth of companies.
3. Due to Liquidity crunch, banks are in problem and unable to lend.
4. NBFC are all beaten down due to lack of funds. Many of them may collapse. Eg: IL&FS, DHFL.
5. Lot of shutdowns and loss of jobs which further reduces purchasing power.
6. As people think purchase of car as luxury, automobile industries takes a greatest hit.
7. No takers for new houses, infrastructure takes a hit.
8. As people are conscious about spending FMCG ( fast moving consumer goods )takes a hit.
9. Recession lasts for 1 to 3 years, government should give lot of stimulus to come out quickly.
How to plan our Personal Finance:
1. Don't get panic " எப்போதும் போல இதுவும் கடந்து போகும் ". It is only passing event.
2. Never stop your SIP, never invest lump sum in Mutual Funds.
3. Go for safer bank deposits and post office and prime minister Schemes.
4. High time to invest in good shares. Choose companies with low debt and high free cash flow . There are the first to hit back.
5. If you are thinking of buying a house, this is the right time. You can do lot of bargaining with the builders.
6. Keep your investment in Gold. It will act like a hedge. When it crosses 40000 to 41000, you can book profit with paper gold.
7. Bond market will flourish. Avoid bonds that have invested in NBFC. You can also go for GILT funds( next 1 year it will give good returns).
8. Invest in Nifty beEs or similar ETFs during every fall of sensex. You will have handsome returns after 3 years.
9. Like Warren Buffett words , recession is also a way to transfer money from impatient to patient.
"வாழ்க்கையில் ஆயிரம் தடைக்கல்லப்பா
தடைகல்லும் உனக்கொரு படிக்கல்லப்பா
வெற்றிக்கொடி கட்டு
மலைகளை முட்டும்வரை முட்டு
லட்சியம் எட்டும் வரை எட்டு"
Aran..
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