Recession before your eyes, is it better to invest or save?

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This condition has triggered the policies of some central banks to combat the surge in inflation by raising interest rates. This policy is seen as running counter to efforts to recover the economy after the Covid-19 pandemic.

In fact, World Bank President David Malpass has asked governments of many countries to be aware of the risk of stagflation, considering that the threat of a recession is materializing.

So, under these conditions, which investment instruments should you choose?

1. Money is king

Financial Planner Advisor Alliance Group (AAG) Indonesia Dandy said the possibility of a recession in the near future could certainly affect the market.

He said that in order to be ready to face the situation, it is best not to be too greedy in making decisions, including the choice of investment tools.

According to Dandy, cash could be an option. Because cash is a long-term investment tool that won’t be affected too much during a recession.

“Meat Cash It is certain that the money will go nowhere and can be prepared when a recession occurs, “he said, quoted by CNN Indonesia on Sunday (9/10/2022).

2. Bonds

Bonds are medium and long-term debt securities that can be traded.

For bonds, you can invest in this instrument by taking fixed coupon bonds (FR series – Fixed Rate). In this way, investments are maintained despite the risk of a recession.

3. Actions

Dandy said equities are still an attractive option for investing during a recession. On a note, it must choose issuers resistant to the economic downturn.

“For the same issuers, usually those who are more resilient to the impact of the recession have solid fundamentals, like those in LQ45, for example,” added Dandy.

The LQ45 Index is a stock market index of the Indonesia Stock Exchange (IDX) comprised of 45 companies that meet certain criteria. Like, included in the top 60 companies with the highest market capitalization of the last 12 months.

So, included in the top 60 companies with the highest transaction value in the regular market in the past 12 months, they have been listed on the IDX for at least 3 months, so they have good financial standing.

4. No.

Dandy said gold could also be the first choice. Because gold itself is a safe haven asset. In general, when the economy is in crisis, gold prices tend to rise. This was demonstrated during the crisis due to the Covid-19 pandemic.

At that time, many investors turned their money into gold, so the price went up. This can be used again by investors in the event of a recession.

“If we look in the mirror with the conditions during the COVID-19 crisis, people flocked to divert their funds to gold, as a result, gold prices rose during the pandemic,” Dandy said.

5. Mutual funds

Imelda Tarigan, financial planner at OneShildt Consulting, believes that while the threat of a global recession becomes more real next year, Indonesia will not suffer too much.

This is because Indonesia’s macroeconomic fundamentals are still relatively better than superpowered countries like the United States and Europe. Therefore, for investment instruments, you can choose sectors that support the domestic economy, such as mutual funds, especially fixed income.

This investment tool, in addition to being able to support the global economic cycle, according to Imelda, also has good prospects for the next two years.

“Less volatile, ReturnIt is still higher than inflation, the outlook after another two years is still positive, “said Imelda.

[Gambas:Video CNBC]