Guide To Investing During A Difficult Economy

All of the analysts are saying that the economy is worse than it has ever been and that you will never again see the same kind of flourishing economy that you've been used to. This seems to be par for the course when it comes to the 60 second news cycle where sensationalism, rather than education, is the norm. People saying this are just trying to scare you to keep watching their news channel and don't realize that they are really just leading you the wrong way. The best way to help the economy is not to abandon all of your investments and start running around screaming in fear, but to continue investing in smart ways that can help you turn a negative economy into a positive down the road. Here is a guide for how you can be an educated investor during a struggling economy.

The first thing you need to do is try to avoid looking at your balance sheets all of the time. If your portfolio looks like the average portfolio, then it has probably lost a lot of value, and no matter how many times you look at it you will never feel ok with losing money. The key to fixing this is to start buying more of the stock you are invested in so that you can lower your share's cost basis. This means that if you've got a stock for 10 bucks that is only worth 3 right now, then start buying more so that your average share is worth more. When things start rebounding, you will see that you'll not only recoup your losses, but you'll make money on the way back up.

Start looking at ways you can make your money work for you rather than against you. Ok, you've lost money in the stock market, so what. Consider buying an investment property to diversify and find a renter to pay your payments. You can also try moving to a smaller house and then finding someone to rent your current house. Although it can be tough to get a loan for two houses during these times, if your credit and income are stable, then you shouldn't have a problem. Investing in real estate is one of the best ways to diversify a portfolio.

Try paying off more debt rather than throw money into the stock market right now. They say the rule is to pay yourself first, and that is true, but think about it like this. If you have a high interest credit card that is costing you 18%, you are actually paying yourself by paying the debt off. Once you have freed up that money, then you can start throwing it towards other debt or investments. As odd as it sounds, when you pay off high interest debt you are actually investing your money by making it work smarter. The key with debt is to borrow low and invest high. There is nothing wrong with paying 5% on a home loan when you can invest the money for 10% elsewhere. But if you are paying 18% and investing in a 10% growth style asset, then you are losing 8% per month, this just isn't a smart way to do business.

There are so many ways that you can take advantage of the current economy to make money and set yourself up for long-term success that we don't have time to talk about all of them. However, keep in mind that you need to reduce bad debt while keeping good debt working in your favor. Buy stocks low to lower your average share cost and keep pressing when everyone else is bailing out. Eventually, you will look like a genius while everyone else has nothing left.