The Economic Slowdown: It’s Not That Bad, Top 5 Reasons
Recessions, economic slowdown, these trying times do serve a threat to one’s wealth and welfare. The impact of the economic slowdown is undeniable, companies face closure, businesses face bankruptcy, and investments are facingpotential failures. With such threats,, what is there to love about recession and economic slowdown? Here are the top 5 reasons why.
1. The Vulnerable Market Creates Opportunities
For bargain hunters with enough dough on their pockets, the loathing and fear creates an opportunity. This is the time to take advantage of the mortgage rates, rents and loans. One can make the most out of the low mortgage rates due to the recession, the rising rents make it possible for one to make a head start in the real estate market, and finally one can borrow money from banks more easily and effectively during these times. One can take advantage of these opportunities.
2. Attractive Prices for Stocks
Stocks tend to have better deals during these trying times. Take the Bank of America for example; the bank lost half of its value during the recession. This led to investors picking up shares of the bank. Based on analysis of finance specialists, price/earning’s ratio for the market has slid. The P/E has fallen from its proud level in the earlier years.
3. Interest Rates are at a Low, at Least for a While
With the economy at a low and with the presence of the risk that it would still plummet, interest rates are expected to be low for the next few years. Federal Reserve Board chairman confirms this, saying that short term rates will remain low for two years at least. The Fed’s action of ramping up the purchase of Treasury bonds even if the economy will look good is still out of the picture. These actions just mean people can borrow at cheaper rates for the years to come.
4. Good Deal on Investment Properties
Home prices are at a low and foreclosure filings are at their lowest levels since November of 2007. This simply means the monthly cost of owning a house is lesser than renting it. Economists say this is an opportunity of a lifetime. But there is a compounding problem. The lack of jobs and the rising credit problems are preventing buyers from purchasing; the market is still terrible for those in need to sell a home. But for those who don’t need to sell at all, the market still looks good, and furthermore it is an opportunity for them to add properties.
5. The Slowdown is a Good Opportunity to be a Landlord
Being a landlord is one path to secure finances and ensure wealth. With house prices become low and rental demands becoming high. The opportunity to become a landlord increases. What should you do then? Invest on properties near stable areas; such as universities, companies or hospitals. Find an agent who has a good grasp of the market you are vested in. Finally make sure that the rental income will cover insurance, loan payments and taxes, allot at least 20% for maintenance and possible vacancies.