I’m off to the beach today since it is going to be a sunny Saturday at the shore. The weekends are usually days where I take a break from writing about credit cards. So in my place, here is a guest post from SVB from The Digerati Life, one of my pf blog buddy.

The recession we have is still ongoing but here’s a question for you: have your savings plans changed because of this economic downtrend? For a lot of people, they’ve decided to make changes to their savings and investment plans in response to how the economy has been behaving — and it’s hard to blame them when their retirement funds have suffered a mighty blow over the past few years.

While a lot of experts say we should stick to our current plans, I believe that when the financial environment tests our strategies, we should be flexible enough to reevaluate them and see whether they need further tweaking. Here are actually some of the considerations I’ve been making during this recessionary period, which I believe will set up my portfolio for much better days ahead.

5 Money Strategies for the Recession

1. Manage your money in a low interest environment.

It’s a little frustrating to see how our cash holdings are earning anemic returns these days. In my case, my money market fund is barely eking out any sort of return. Even high interest savings accounts are no longer as high yielding as they once were. If you’ve got extra cash, you’re probably asking yourself where’s the best savings account for your funds. In my opinion, an online account is a great option because internet only banks are able to cut down on costs and pass on these cost benefits to customers via higher yields.

2. Seek out cost efficient financial institutions.
Banks can have sneaky bank fees while brokerages and fund companies can easily hit you up with transaction fees. Even if you’re investments have a great rate of return, you don’t want them eaten up by high cost funds or commissions. Why not check out this list of best online brokers for some low cost options? You may want to take a look at either ETrade or TradeKing to see if they fit the bill. Mutual fund companies (like Vanguard and Schwab) that offer index and no load funds are also great places to invest.

3. Look for places that will offer you great service.
I’m noticing more and more that financial institutions are trying to be more competitive by taking the extra steps to improve customer service. During this recession, these financial companies are all after our business, so don’t be afraid to ask for dedicated help from your bank or broker when the need arises. I can’t tell you how many times I’ve received courtesy calls from various institutions, checking in to make sure I’m satisfied with their services.

4. Rebalance your portfolio.
A stock market slump is actually an ideal time to tweak your portfolio in case it’s gone off kilter. You may want to restore your portfolio’s asset class proportions to their original state now that you could be subject to less capital gains taxes if you do decide to sell larger positions. It’s also a good time to buy new positions given the better market prices across the board.

5. Drop your losers for tax benefits.
I also think that if you’re holding some losers in your portfolio, it’s a great time to bid them goodbye. Decluttering your portfolio when prices are relatively lower allows you to write off the losses; if you’re interested in buying back your original positions, just make sure you don’t trigger the “wash sale rule”.

Sure, the recession has ravaged our portfolios and put a cramp on our interest earnings. But I also believe that our current economic situation is something which we can leverage for financial gains. If we do the right money moves, the opportunities we’re afforded by this kind of downtrend may actually help solidify our investment plans further (since they’re tested by a poor market) and set us up for a stronger comeback when the economy eventually bounces back.

This entry was posted on Saturday, July 25th, 2009 at 06:56 and is filed under Economic Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.