When the market is soaring, it’s easy to forget that what goes up can also come down. But economic tend to be cyclical, which means that another recession is in the future. Whether it’s fast approaching or still a ways off, it’s wise to prepare for its eventuality. This way, you won’t join the panicking.
Instead, you’ll remember that invest in real estate can perform even during a recession – you just need to know which ones. A financial advisor could help you build a recession-resistant investing plan. Here are few things you should consider when a recession hits.
The 2008 housing market collapse was a nightmare for homeowners. However, it turned out to be a boon for some real estate investors. When a recession hits and home values drop, it may be a buying opportunity for investment properties.
If you can invest in a property with a reliable developer, you’ll have a steady stream of income while you ride out the recession. Once the project is over (2-3 years) you can be sure the recession is over, and your money didn’t lose its value.
“Invest” in Yourself
If you lose your job and income during a recession, you can rebound by “investing in yourself.” You could go back to school to gain additional knowledge or skills that could help you get a better job.
Paying down debt is another option if you worry that your job situation might go south at some point. The less money you have to spend on bills, the less stressed you’ll feel during an economic crisis.
Purchase Precious Metal Investments
Precious metals, like gold or silver, tend to perform well during market slowdowns. But since the demand for these kinds of commodities often increases during recessions, their prices usually go up too.
If you’re interested in buying precious metal securities, turn your attention to ETFs. These funds are collections of investments within a single industry, which, in this case, is the precious metal market. You could also purchase a gold IRA if you’re saving specifically for retirement.
Bottom Line
If you’re investing for the long term, a looming recession shouldn’t panic you. You may want to off-load some investments to take some profits off the table. But for the most part, your strategy should not be to wait for the storm to pass. You may think you’ll get back in when prices are cheaper but it’s impossible to call a bottom until it has passed.
Instead, you should join a position as long-term investments. That said, if you have the cash to invest, you may want to consider invest in recession-friendly sectors such as real estate, utilities and health care. Real estate investment that has been paying a fixed rate for many years are also a good choice since they tend to be long-established that can withstand a downturn.
Disclaimer
The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
The information contained herein is not intended to be a source of advice or credit analysis with respect to the material presented, and the information and/or documents contained in this blog do not constitute investment advice.