What many of us forget is that economies recover, although we rarely know when. But if you prepare yourself for the road ahead, your financial outlook for the new economy will leave you sitting pretty.
Know Your Time Horizon
Individuals approaching retirement will have much different needs from their investments than young graduates just entering the work world. Aligning your goals with your investments is fundamental to being a successful investor. (To read more on investing for your time horizon read The Seasons Of An Investor's Life.)
Lock In Low Rates
Even if you are locked in at a higher rate already, you might still come out on top by remortgaging at a lower rate, even after paying penalties associated with renegotiating that rate. Weighing all your options to make the best decision can really pay off. (For more on locking in low mortgage rates, see Got A Good Mortgage Rate? Lock It Up!)
Pay Down Debt
Paying off high-interest debt, such as credit cards, should be the first priority for people during uncertain economic times. Carrying balances on high-interest debt vehicles can make it very difficult to build savings when the economy turns around. (To read about debt consolidation, see Debt Consolidation Made Easy.)
We've all heard the old phrase "don't keep all your eggs in the same basket". This old adage couldn't be more true when it comes to your investments. Keeping a diversified portfolio of investments protects your nest egg from risks that can ravage your portfolio.
It's no coincidence that the professional money managers who are constantly preaching to investors about diversification are the same ones who tend to escape market downturns and negative economic news in a far better position than those who don't. (To learn more about diversification read, The Importance Of Diversification.)
Make A Budget
Quite often it can be easier to ignore the obvious or put off financial planning for another day. However, by knowing your financial situation and knowing steps you need to take to achieve your goals, you can put yourself on the path to a positive and successful financial outlook. (For more insight, read The Beauty Of Budgeting.)
Don't Go It Alone
A financial planner can help you set up a financial game plan and make sure that you stick to it. Take the time to meet a few financial planners and get a feel for them as people. You should be 100% comfortable dealing with the person who will be helping you handle your finances. (Find out more in Shopping For A Financial Planner.)
By using the tools we've discussed here, you can put yourself in a position to be financially confident in your future prospects when bad economic times turn around.
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