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How to Profit in an Unstable Economy

Photo courtesy of Mick baker
Photo courtesy of Mick baker
At the moment the economy in many countries is unstable due to the vote in the UK to leave the EU. There have been other times in history when world economies have been hit by events and there will be again in the future. It is worth knowing what to do in this sort of circumstance in order to protect yourself against fluctuations in the market.

Do Not Sell Your Shares
It is common that shares drop rapidly when investors get nervous. They worry about what might happen to businesses as a result of the changes and therefore quickly withdraw their money, thinking that otherwise the value will fall and they will lose out. As more and more and more investors do this the value does fall and more people panic and think that they should draw out their money. However, this can be an unwise thing to do. If you sell when the prices are low, you will get very little money back from your investment and may even make a loss. Markets always settle again, although it may take time and often there are no specific businesses that do not recover, although there is always a risk. It tends to be more sensible to leave your money invested and wait for the price to rise again in order to avoid losing a lot of money.

Consider Buying Currency
At the moment the price of sterling is very low compared with wat it has been lately. This means that if you buy it at the moment, you will get a lot for your money. So if you are planning a holiday to the UK, then it can be wise to buy currency now while it is cheap. If you invest in the currency markets, you may be waiting to see when the currency hit its low point before you start buying. This is very difficult to predict and so it could be worth buying some now, while it is cheap and hoping that the value will rise. It is likely that it will stay low in the short term but will rise in the long term and you could potentially make a good profit if you are willing to wait.

Pay off Debts
It could be a good time to pay off your debts. If there is economy instability it may means that interest rates are increased and debt gets more expensive (although they could also be reduced). It could also mean that prices rise and so by reducing your outgoings each month, by getting rid of your debt repayments, you will have more money to buy the things that you need. You will also feel more secure knowing that you do not have those extra outgoings to pay for. Of course, while interest rates are low, it can be tempting to borrow while it is cheap, but with so much uncertainty it can be wise to try to keep your finances under control particularly if prices are likely to rise and wages not likely to go up.

Keep Spending if you can Afford it
It can be tempting in some ways to hold onto as much money as you can. Having savings to back you up is always a nice comfort blanket to have. However, the more people that stop spending money, the more the economy will shrink and the longer the problems will last for. Although one person’s spending habits will not have a huge influence, if everyone spends what they can afford, perhaps supporting small and local businesses to help their local economy, it can make a difference.

Do not Panic!
It can be so easy to panic at the moment. However, it is far too early to know what the long term effects will be so it can be wise to wait before worrying too much. It is human nature to worry and particularly British to do so as well! It is wise though to take a step back and look at your own life and what has changed there or what may change. It is likely that most people will not see that much of a change, particularly at the moment and will have time to plan for changes which may happen in the future. Keep a level head and try to weigh up the possibilities.



Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process and sells her books through

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