Are you ready to come out on top from a recession? (Part 2)

Think that a recession will be beneficial to you? 

Ask if you have these:

1. Certainty that you will not lose your job or take a pay cut if you still need the income.

2. Certainty that you do not have debts which might turn crippling.

3. Certainty that you have the funds to take advantage of any value for money investments.





Of course, you know what they say about the only two things which are naturally certain in this world and they are none of the above.

The first statement is basically the most important for the majority of us. 

How to have a secure income? 

Work in the civil service? 

That is the closest to an iron rice bowl I can think of. 

If we do not have an iron rice bowl, we better be thinking of having more than one rice bowl just in case.





The second statement is an important consideration for anyone who has debt. 

Anyone from the middle income category devoting more than 60% of his monthly income to debt servicing, in my opinion, is running a big risk. 

This is also why the government came up with the latest property cooling measures to prevent people from over extending themselves.





The third statement is something that regular readers are familiar with. 

We must have a war chest. 

Now, this war chest is not money we set aside in case of an emergency. 

This war chest is money in excess of that emergency fund. 

It is truly money that we can afford to lose. 

I mean we wouldn't want to lose it but if we should lose it, it should not sink us into financial difficulty.

For a recession to be good for us, we must be in a good condition. 

Are you ready?






Related posts:
1. Do you want to be richer?
2. Get on top of your finances.
3. Be prepared for war!
4. Are you ready to come out on top from a recession? (Part 1)

Are you ready to come out on top from a recession? (Part 1)

Really? Not save more money har?

Things have become too expensive in Singapore. 

You name it and the price is probably much higher now than just a few years ago.

This has led to not just a few people thinking that a recession is probably good for the country as it will bring down prices and that these lower prices are beneficial to Singaporeans. 

This is pretty one sided in thinking.





Nonetheless, there is more and more talk of an impending recession and some "gurus" are seeing precursors of the 1997 Asian Financial Crisis now. 

Would it be Thailand to lead the pack again? 

Or would it be Malaysia or Indonesia?

I have been through quite a few recessions and I can say with certainty that they were not pretty. In severe cases, people lost their jobs and their homes. 

In many cases, people took pay cuts and had trouble making ends meet. 

The 1997 Asian Financial Crisis was particularly depressing for many.

I am very sure that recessions make life for the common people more difficult.

The only people who benefit from recessions are the rich.

When a recession hits, we will read in the papers how the very rich lost millions of their wealth and, perhaps, this makes the general population feel better. 

However, what the rich lost is mostly just on paper. 

It is immaterial to them. 

They are still very rich, in many cases, and their lives go on unaffected, especially if their assets are still generating meaningful income.





After a recession, we would read in the papers how the very rich emerged even richer! 

Why? 

They made use of lower prices to buy more income generating assets which would see their prices rise in an economic recovery! 

Recessions are good for some people and they are the rich!





So, recessions are not natural equalisers. 

Recessions usually make the gap between the rich and the poor bigger.

Do you have what it takes to benefit from a recession?

Find out in Part Two: here.

Related post:
STE's story: The Millionaire Next Door.

A bit of history.