Sadly the economic crisis is more like a regular global event which happens mostly every 10 years. The jobs are lost and spending is reduced, it is one of the worst times for many people. Nevertheless, it is possible to hedge against the risk of losing your money and job. According to the theories of DSGE, the business cycle the economy fluctuates and it is best to take advantage when the economy at it's pick. The insurance and risk free investments are the few of the options considered in the theories of economics, however, not everyone has and access them. The majority of the individual people consider the financial instruments to invest when their personal economy at it's pick. However, during the economic crisis the price of commodities and share prices drops and therefore, the investments that was made will be lost. The saving is better than investing in stock and derivative market due to the high volatility. The currency exchange market is among the worst investment to consider, even the most experience investors cannot predict the market, due to the high influence in the actions of the government.
The few ways to hedge are spending time and effort on developing skills and as well as always keeping small business in the side of your carrier. During the economic crisis the companies starts to fire people to reduce the cost of the company for survival. The small business can also be costly to startup, but if it is not rushed then the cost can maintained with efficiency. Some of the economic graduates start their carrier with the small businesses in the side. In case if their carrier slows down, then during that time they can focus on their small business. During the economic crisis, the small businesses also faces difficulties during the business cycle due to reduced in spending from people. Therefore it is important to diversify your investment so that it can always have some stream of money inflow. The theory of finance where ''don't put all the eggs in basket'' is to reduce the risk by diversity. For example if the small business is online store, then the cost of running shouldn't be too high compared to normal store due to elimination of rent, therefore if you have an actual shop then diversify with the online. The online business can also be competitive therefore, consider the business that people needs it rather than wants it. |
AuthorEcon2u and others CategoriesArchives
August 2017
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