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What Type of Investments are Worth Making in THIS Economy?


With the economy teetering on the edge of a recession, it's time to reevaluate your investments. This does not mean you should panic and resort to storing all of your money underneath your mattress.

Investment rules

Investment rule #1 in a down economy? Don't panic (this is when some of the worst investment decisions are made).

It simply means that when the economy is down, as it is right now, investment professionals suggest reviewing and, perhaps, regrouping your portfolio. Believe it or not there are wise moves to be made financially, even now.

1. Pay Down Your Credit Cards

Though not technically an investment, paying down the balances on your loans gets you a guaranteed return, says William Suplee IV, CFA, CFP, president of Structured Asset Management in Paoli, Pa. He told

"One simple way to earn a good return is to start paying down existing credit card balances. The return you will earn will be equivalent to the rate charged on the existing card balances.

In many cases, this return will be hard to top in a difficult investment environment. A smaller balance will allow you to have more credit available for temporary needs in times of emergencies."

2. Now is the Time to Buy Stocks

This is the advice from Jonathan Clements, senior special writer for The Wall Street Journal. He points out that although the economy may continue to get worse, the stock markets will probably only get better.

"This is the time to be buying stocks, not selling them. Stock investors have already discounted a slowing economy -- and, with the recent rally, investors seem to be looking ahead to better economic times," he says on

3. Certain Short- and Long-Term Mutual Funds

When rough economic times present themselves, considering short- and long-term mutual funds makes sense. But the key, according to David Stevens, CFA, CIMC, a senior investment strategist at Wells Fargo Family Wealth Group in Minneapolis, is to choose those "where the investment manager of the mutual fund is looking to capture returns from underperforming sectors and markets, too."

4. Foreign Currency Investments

As the dollar has been on a downward trend for years, many investors are taking advantage of foreign currency investments. Among the most popular are the Australian dollar and the Brazilian real.

"A 12-month CD in the Australian dollar -- the top performer among the [EverBank World Markets] listed currencies -- had an annual percentage yield of 5.38 percent [earlier this year]," according to the Jacksonville Business Journal.

stock market

Investing in the stock market when the market is down is a wise move, as historically those who invest in the recession periods when the market is down gain the highest increased shares of stock value.

5. Real Estate

With housing prices down, now is actually a great time to buy ... not only for investment purposes but to obtain a home you may not have been able to afford otherwise.

"Everything works cyclically," said Certified Financial Planner Walter Chown and CEO of Jacksonville-based PLE Wealth Management. "At some point, perhaps in five years or less, there will be investors who are glad they had the wherewithal to buy residential property that got foreclosed on."

More Smart Money Moves During a Down Economy

Investments are only one aspect of a secure financial picture in a troubled economy. What else can you do to protect yourself and your family?

  1. Work to assure you have savings in excess of 3 to 6 months or more of what you will need to pay your bills if you become unemployed.

  2. Set up an automatic withdrawal from your monthly paycheck with your bank and employer so your savings automatically increases.

  3. For your children or grandchildren set up a college fund account. Many have little to no taxation on gains during the period of the term of the savings up to college age of the child.

  4. Teach your children well by educating them on how to manage their money for life!

Recommended Reading

Should You Invest in Gold and Silver?

What It Takes to Be Ready for Retirement Financially: An Essential Overview


Jacksonville Business Journal July 18, 2008 June 24, 2008

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