Business FinanceEconomic Term Paper & Topics - Assignment Example

Hence investors were discouraged to invest their money in productive ventures. This situation adversely impacted the circulation of money in the economy and further impeded economic growth. Reports indicate that a large number of investors lost their millions of money as a result of the recessionary pressures. This paper will explore the types of investment people should choose during recession to avoid huge financial losses. Investors can reduce risk and uncertainty associated with their investments during recession by paying specific attention to investment strategies.

In a recessionary situation, cash is considered as the king both for businesses and individuals, and therefore people must be increasingly vigilant while investing in various types of liquid, cash accounts. Based on an investor’s portfolio and financial needs, he can enhance the portfolio with more cash reserves such as saving accounts, money market accounts, and short maturity certificates of deposits. While going on with this type of investment, investors must ensure that there is sufficient liquid cash reserves left to meet their three to six months’ expenses.

According to the E-PersonalFinance.com, investing in evergreen industries and sectors is a potential investment strategy during the time of recession because consumer demand in those industries or sectors would remain almost stable even during tough economic times. The potential benefit of preferring evergreen industries and sectors for investment is that those sectors would quickly come back to normal condition and achieve a staggering growth rate once the recessionary pressures are off. Pharmaceutical industry is a good example.

It is obvious that people will continue to buy medicines and other necessary health products and services whatever the economic condition is (E-PersonalFinance.com). The energy sector is really potential for investment during recession as energy or power is an