10 ways the Global Recession will affect your investment decisions.

The Global Financial Crisis or Global Recession as it is popularly referred to will affect your investment decisions in the following ways:

1. Your cash will be able to purchase less in the market because of increased prices.

2. You will have less investment options. Meaning, you will have less choice in the type of investments you can make in the market place. Since stock prices are plummeting. You cannot be advised to invest in some types of stocks; you will lose out. This does not mean you cannot entirely invest in stocks, it only means you must watch carefully before you invest and when you do invest; do not expect to sell off immediately. You may have to 'buy and hold'.

3. You will have to hold more funds in liquid form. Since you cannot invest as much in high value stocks, many people (especially risk averse people) will prefer to hold their funds in liquid form, that is cash or easily convertible investments. Some people will hold funds in their dusty piggy banks or in low interest bearing savings accounts.

4. You have to reduce consumption! The best way to battle inflation is to reduce your consumption of expensive goods. Must you absolutely have that next dress, the next bottle of wine or the next burger?

5. Your investment will yield less! South Korea and Taiwan have already cut interest rates. Other countries will most likely follow. This means that you will earn less than usual on investments in the standard market e.g savings and fixed security deposits.

6. Taxes will increase in order to fund the necessary bailouts and shore up the economy.

7. Goods and services will increase in prices. You will pay more for your needs.

8. Losses will be more easily made in a panic attempt to sell off high priced stocks and investments before they crash completely.

9. Big government projects which would have had a lot of public service impact will have to wait.

10. Loss of value on existing investments. As the share prices are going down what you had as investment value also goes down.