The Upcoming Recession

It’s beyond argument that recession is looming globally. India specifically has seen the worst year so far.

Auto Industry woes continue. Livemint recently reported that “passenger vehicle industry suffered its worst sales performance in nearly 19 years in July as a slowing economy, higher ownership costs and floods in some states deterred buyers”. Auto companies are also stopping productions as auto sales have slowed down.

The auto industry isn’t the only one to suffer, other industries are also seeing a slowdown.

What this means is that things are going to get worse, and by 2020 we might hit rock bottom. I’m not saying this, it’s all over the news. Agreed, our media is used to hyping things unnecessarily. But hey it’s not just India, Global economy is on a slowdown. During the last recession in the US in 2008, we still had our local economy going strong. Not this time though. Hence it’s prudent that we plan for the next few months accordingly.

My plan for the next 18 months

This isn’t investment advice but I’d like to share my plan with my readers.

I’m immediately cutting off my SIPs in Mid-caps and Small-caps. The mid and small caps are so unstable and are going to be unstable for the next few months. I don’t expect them to bounce back in the next 2-3 years. I’ll continue to invest in my index funds — NIFTY50 and Next NIFTY50.

Here’s my current portfolio since I started using

Index fund portfolio

The SIP amount that should have gone into mid and small caps will now go into good old Recurring Deposit to create cash buffer.

I already have my emergency fund in place and because I’m too conservative, I have a good cushion.

Why am I putting so much in debt? Because I work in a startup. I work in an industry which is very fickle. If things start going down, it will be a sharp slide. Considering the fact that I’ve only worked in startups, it will slightly difficult for me to look for a job in a more stable economy.

What are your plans for the next 18 months? Your determination or plan for the next few months will determine your FI journey.

Leave a Reply