Smart investors can always set a small amount of money in their investment portfolio primarily poised to take advantage of dips in the market. For most of them, they will always try to hold cash about 20% to 30% of their total investment portfolio to take opportunities when there is pullback in the market.
When a recession strikes, the asset prices such as shares market, property will fall. Normally, ordinary investor who perceive that as high risk in doing something with their cash will potentially won’t earn the modest return. The reason is they feel fearful to take the challenge and have negative thinking when market downturn.
It’s advisable to afford to keep your investment for at least 3 years, preferably 5 when comes to investing in shares or property. And, don’t always worry about perfect timing, though; it’s more important to invest where there is good value, and to stay in for the longer term to get compounding to work for you.
Another way you can do is, always remind yourself of the Physics – Mr. Newton’s theory “What goes up, must come down. And, what goes down, must also come up“. This is actually a part of the economy’s life cycle. So, that’s why I always said that cash at hand is the most important asset while making any kind of investment.
“What goes up, must come down. And, what goes down, must also come up“.