2023 Predicted Global Economic Recession
2023 Predicted Global Economic Recession, Here are Steps to Deal with It
The global economy is in danger of falling into a recession. This condition is in line with continued inflation which has triggered an aggressive increase in the central bank's benchmark interest rate.
A number of institutions and experts project that the global economy will enter a recession next year. The impact of a significant increase in interest rates in a short time accompanied by a spike in inflation will hit various sectors of the economy.
With the economic recession, one of which is marked by the contraction of gross domestic product (GDP) growth, of course this has the potential to have an impact on the financial condition of the community, especially workers.
Efficiency within the company is one of the things that often happens in a recession.
Therefore, financial experts advise the public to "bold" their cash holdings. Thus, the public can minimize the impact of the global economic recession.
Here are the steps that must be prepared in the face of the 2023 economic recession:
Don't rush to sell assets
Educational Plan Partner Financial Planner Mike Rini Sutikno said the economic recession does not mean people have to stop investing. Or even sell the entire ownership of his investment assets
Mike realized, in an economic condition that is in a recession, investment performance tends to decline. However, the public is advised not to immediately sell their investment assets. Moreover, the investment assets currently owned are far below the purchase price.
Instead of increasing the ownership of cash, it actually makes people lose money.
"The answer is not selling everything, then putting it into savings, into gold, it's panic. The most appropriate answer is to manage the investment risk, or risk management," he said.
Mike further explained that an increase in the portion of cash as an emergency fund is needed to maintain individual liquidity amidst future economic uncertainties.
With a good level of financial liquidity, individuals will be able to survive for a longer period of time.
"In order to increase liquidity, this is an increase in emergency funds, maintaining our emergency funds according to our needs," he said.
However, on the other hand, people are advised to keep investing. The hope is that in the midst of a surge in inflation, public funds will not be eroded, instead they will grow.
He also recommended to the public with a focus on asset diversification. As for the funds used to invest, it is also advised not to directly in large nominal.
"So it's true, we must still have cash, a safe investment, right. It is allocated proportionally," he said.
He added, "Then we spread our investment funds again, we can also buy high-liquidity investments, for example money market mutual funds."
Don't stop investing
In line with Mike, Alliance Group Indonesia Financial Planner Andy Nugroho said, with fluctuating market conditions, it does not mean that individuals have to reduce or even stop investing.
According to him, currently individuals can still place their funds in investment instruments that have low risk. Examples are precious metals, deposits, or fixed income-based mutual funds.
"So that (the funds) can still be used and disbursed, but the possibility of fighting inflation is strong enough, we can put it in cash or investment instruments that are easy to disburse," said Andy.
In addition, individuals can actually still place their funds in high-risk investment instruments such as stocks. However, this must be adjusted to the investment profile of each individual.
As is known, the investment risk profile is generally divided into three types, namely conservative, moderate, and aggressive. Where conservative has the lowest risk profile, moderate has the medium risk profile, and aggressive has the highest risk profile.
For individuals who have a conservative risk profile, Andy does not recommend placing their funds in high risk investment instruments, such as stocks.
He recommends that all investment funds be placed in low risk investment instruments.
"I would suggest that at this time it's more of a deposit, for example 20 percent, then 20 percent of precious metals, then if you want a fixed income mutual fund it can be around 30 percent, and in state securities it can be in the form of ORI or retail sukuk it can be 30 percent. ," he said.
Meanwhile, for a moderate risk profile, individuals are allowed to place their funds in mixed-based mutual fund products. However, most investment funds are recommended to be placed in fixed income investment products such as deposits and government securities.
"They can mix it up if they have a 30 percent portfolio in SBN, then 40 percent for mixed-based mutual funds, then 15 percent for deposits and 15 percent for precious metals," he said.
High-risk investment instruments such as new stocks are recommended to individuals with an aggressive risk profile. In fact, share ownership is recommended to reach 50 percent of the total investment portfolio
However, Andy reminded, individuals need to continue to monitor the fundamental conditions of the global economy. This is to minimize the potential for large losses if the stock market crashes later.
"Friends whose portfolios are aggressive, I would suggest a 50 percent stock market, then they can also enter 30 percent stock market-based mutual funds, then retail bonds or retail sukuk 20 percent," said Andy.
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