{"id":17533,"date":"2021-11-08T19:00:00","date_gmt":"2021-11-08T11:00:00","guid":{"rendered":"https:\/\/www.comparehero.my\/blog\/uncategorized\/what-should-you-invest-during-recession-expert-opinion.html"},"modified":"2026-03-26T16:00:29","modified_gmt":"2026-03-26T08:00:29","slug":"what-should-you-invest-during-recession-expert-opinion","status":"publish","type":"post","link":"https:\/\/www.comparehero.my\/blog\/investments\/what-should-you-invest-during-recession-expert-opinion.html","title":{"rendered":"#InvestInsights: What Should You Invest in During a Recession? An Expert Weighs In."},"content":{"rendered":"\n

Are you considering investing when a recession hits during this pandemic, but not sure what to invest in? Here are some tips and advice given by an expert on investment strategies and what you should invest during this period.<\/strong><\/p> \n

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Investing during a recession seems scary. The volatility of the market can result in two polarizing scenarios: the rare opportunity to score a huge gain or accumulating an enormous dent on your portfolio (and wallet) due to turbulent market movements.<\/p> \n

But investing during a recession is not impossible. Based on findings from our previous article<\/a> in this #InvestInsights series, we concluded that it may not be a bad idea to start investing during a recession after all, as long as one is aware of their limitations and circumstances.<\/p> \n

The rationale behind it is simple – market fluctuations are normal during a recession, and bailing out on the markets will cause more harm than good because it\u2019s always better to hold and regain value than to sell and incur recession-related losses<\/strong>.<\/p> \n

But before you can build a profitable portfolio, there are some underlying factors to consider before diving head first.<\/p> \n

Factors to consider before investing<\/h2> \n

First and foremost, as a quick recap from our previous investing article, when it comes to investing, it\u2019s crucial to get the basics right<\/strong> because what you don\u2019t know will cost you.<\/p> \n

Secondly, relying on hot tips and hunches, and educational articles (like ours!) is not enough. Investors need to conduct comprehensive due diligence on companies<\/strong>. There\u2019s a lot of publicly available information out there to help you through this process. Suss out the company by reading up their latest news, transactions, financial statements, balance sheet etc. Find out as much as you can about them, especially the basics like market capitalization, revenue and profit trends, competitors, ownership and debt-to-equity ratio.<\/p> \n

Related:<\/strong> #InvestInsights: Should You Start Investing During A Recession? An Expert Weighs In<\/a><\/p> \n

But investing is a two-prong effort – besides understanding the company and what they have to offer, it\u2019s equally important that investors assess their own level of investment capability as well. Figuring out what you\u2019re capable of delivering as an investor, will ultimately help you decide the crucial factors to consider before investing.<\/p> \n

To help us identify what types of investments to consider during a recession, CompareHero.my spoke to a certified financial planner and personal finance blogger to help us get two different perspectives. But before we get there, you need to first ask yourself six very important questions.<\/p> \n

6 questions you need to ask yourself before you start investing<\/h2> \n

Mull over these six questions to help assess whether you are ready to make an investment:<\/p> \n

1. Are you capable of investing right now?<\/h3> \n

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Investing for a house? Or maybe a new car? Narrow down your goals before you begin investing. <\/em><\/p> \n

With COVID-19 still rampant across the globe and the economy still in shambles due to the Movement Control Order (MCO), investors need to be frank about their own capability of investing<\/strong>.<\/p> \n

For most people, having a secure income or building an emergency fund are their current top priorities. Investors must figure out if they are fit to invest before even beginning to invest<\/strong>.<\/p> \n

\u201cFrom my perspective, survival is the absolute priority right now. Let’s say you are in an industry where you feel the job isn\u2019t very secure and you have loans to pay – I think someone in this instance shouldn’t just be thinking about survival but potential loss of income<\/strong>,\u201d said Aaron Tang of Mr Stingy<\/a>, a popular personal finance blog that covers a variety of topics, including money, time, career and relationships.<\/p> \n

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Though Tang isn\u2019t a certified financial planner and doesn\u2019t have formal financial advisory credentials, he\u2019s gained an extensive following online from writing about personal finance on his blog, Mr. Stingy, in his spare time. (Image source: Mr. Stingy)<\/em><\/p> \n

\u201cWhat happens if a person\u2019s company goes down and they\u2019ve lost their income? I think someone in that situation is thinking about income replacement before investing<\/strong>, especially in today\u2019s bad economy where people are getting laid off and shops are closing etc.,\u201d he added.<\/p> \n

To help cushion any unwanted circumstances during a recession, Tang said it\u2019s crucial for everyone to prioritize building their emergency savings first<\/strong>, which is typically 6 to 12 months of a person\u2019s income<\/strong>. \u201cFrom how I see it, you need to build a very secure base first, and that comes from having a stable income. This is particularly true when investing in high risk investments,\u201d he said.<\/p> \n

2. What are you investing for?<\/h3> \n

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Your risk appetite and duration of investment, a.k.a your time horizon, depends on which stage of life you\u2019re in. (Image source: Harveston Financial Group) <\/em><\/p> \n

Everything that we do or pursue in life usually begins with a clear objective in mind. Why do we go to school? To gain knowledge which would later help us find a job or career that aligns with our interest. Why do we find a spouse? So we can have a partner in life who we get to spend time with and build a family together. The principle applies to investing too.<\/p> \n

Before investing, take a step back and remind yourself of the objective of your investment<\/strong>. Are you just eager to beat the market and make a quick buck by maximizing returns in the short term? Or is it for more personal gains like retiring, having enough to travel, buying a house or sending your kids to college?<\/p> \n

Find out your real goal and stick to it. If it is having a certain amount of money by a certain date, then commit to that. Any decision you make while investing should be to serve that goal and nothing else.<\/p> \n

3. What stage of life are you in?<\/h3> \n

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People in different stages of life will have different needs and resources, and figuring out which life cycle you belong to will help you understand what types of investments suits you best. (Image source: Harveston Financial Group)  <\/em><\/p> \n

A 25-year-old fresh-out-of-college will have different financial goals and needs compared to a mid-age 35-year-old, or a retiree.<\/p> \n

Similarly, a fresh graduate wouldn\u2019t be able to take up the same amount of investment risk compared to an established manager who might be earning a six figure salary. Therefore it is crucial to figure out which stage of life you\u2019re in before committing to a certain investment risk.<\/p> \n

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A certified financial planner, Phang is also licensed by the Securities Commission Malaysia as a Capital Markets Services Representative and by Bank Negara Malaysia as a Financial Adviser\u2019s Representative. (Image source: Phang Kar Yew)<\/em><\/p> \n

A person\u2019s life stage determines their risk appetite, Phang Kar Yew, Executive Director and Co-Founder<\/strong> of Harveston Financial Group<\/a> said, these two factors must go hand in hand in order for a person to pin down the most suitable type of investment for them.<\/p> \n

\u201cWhen you\u2019re younger, you may afford to take the \u2018fast and furious\u2019 approach, which is to be more aggressive in the market. But I still believe that at that stage, the priority should be about wealth protection. You have to protect yourself in the event anything unfortunate happens,\u201d Phang told CompareHero.my. \u201cThis is called investing according to the stages and lifestyle requirements.\u201d<\/p> \n

4. Do you understand your needs and resources?<\/h3> \n

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Do you have enough to invest? Begin your journey with this crucial question first.<\/em><\/p> \n

Take some time to figure out if you actually have enough resources to invest<\/strong>. Purchasing a stock may not be too complicated or time consuming, but the act of planning and figuring out what and how much resources is available at your disposal<\/strong> is what needs more of your attention.<\/p> \n