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Investments during recession. Government bonds & Preferred debentures.BY: Muhammed Haris | Category: Business and Finance | Post Date: 2009-07-08
Recession has caused an adverse effect on all economies worldwide. International market itself has buckled because it. So it is the time to play safe or invest. People need to be very careful in their earning and spending habits. The shortage of funds even causes increase in the number of scams. But it is not advisable to avoid fresh investing since the market is cheap. The brilliant and cautious planning of an investment could make the person's assets much safer.
Investing in risky sectors may not be safe during recession period. Stock market has regular ups and downs. Though there can be few industries constantly maintaining their growth coincidentally or with the goodwill of previously planned projects. But projects that were won or started before recession cannot be just taken for granted as they may get scrapped due to shortage of money. There is a likelihood that the industries who already had sustainability plans will be affected gradually. When most of the business crash, few business may make major gains, but often those gains do not last long enough.
Primarily the government bonds and investments in preferred debentures would be the safe areas during recession.
Preferred debentures are named so, because, they need to be given preference as per law, during the profit distribution and the liquidator is obliged to prefer the preferred debenture holders during the liquidation of the company. Even the preferred debentures have the clause of redeeming their investments and even accumulating the share of profit, in case the company doesn't earn profit in any year.
Government bonds are also being invested in public sector enterprises. Public sector enterprises are mainly deal with businesses which requires huge investments like Telecom industry, Power industry, Infrastructure sector etc. These business involve the huge investments, it is not easy to shut down these industries. Even the law protects the interest of the investors in public sectors. So the investors would invest in these sectors to play safe in recession periods.
This my personal opinion, please do your own research before making any investments during the recession.
Article Source: http://www.saching.com
About Author / Additional Info: Hi, I am Muhammed Haris. Working for Hinduja (Formerly HTMT) Glabal solutions, Bangalore. you may reach me at firstname.lastname@example.org or +919739094168
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