In this post we are going to explore what I believe in my personal opinion to be the 3 best ways to profit from a recession.
Recessions don’t tend to last a long time. If we take a look back at 10 cycles since 1950, data shows that recessions have typically lasted between 8 and 18 months, with the average length of a recession being around 11 months.
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Best Ways To Profit From A Recession
It is a proven fact that historically, recessions have created more millionaires when compared to any other economic cycles or timelines.
The reasons for this is because recessions can create significant buying opportunities for those who understand them, are prepared and have the means to take advantage of them!
Just like our weather has seasons and is ever-changing, the economy goes through cycles. So, as one cycle starts, another cycle will be due to start in the future at some point.
During a recession the price of many asset classes such as stocks and cryptocurrency tend to fall heavily. Prices can come crashing down to create a massive buying opportunity for savvy investors who are prepared to look beyond the short term market noise and buy more of their favourite fundamentally strong assets at a huge discount.
Imagine this scenario. Let’s say one of your favourite assets that you have done thorough research on has fallen in price by 50% during a recession from $200 per share to $100 per share.
If you have done your due diligence, have an understanding of the fundamentals of the company and believe in the future growth plans and potential of this company for the next 5-10 years, then this helps give confidence to your decision to buy more of this asset currently at a discount.
All things considered, let’s say you decide to now “buy the dip.” You buy 100 shares of this stock at $100 per share during a recession. During the future market recovery, if this share was to reach its pre-recession price of $200 per share, you would have effectively doubled your money and achieved a return on your investment of 100%.
That’s just one simple example. Imagine if you were accumulating other assets in the same way during a recession. Can you see the potential power and opportunity of the future wealth transfer on offer here?!
This is why as hard as recessions can be perceived, on the one hand, they can also actually represent an incredibly lucrative opportunity of a lifetime.
Warent Buffet famously said “Be fearful when others are greedy and be greedy when others are fearful.”
It is usual during times of recession or potential recession that several market forces are at work to squeeze our disposable income to its limits! When inflation is high and interest rates are rising to curb inflation, this can all have a significant negative and financially painful impact on our monthly disposable income and our overall finances.
Rising interest rates will generally mean that any loans we have such as perhaps our home mortgage will likely increase. The knock-on effect of high inflation means that shoppers get much less for their money as the cost of goods and items that we buy on a daily basis, especially food and energy increases to unusually high prices.
However, there is a positive wealth proactive solution to all of this! Let’s take a closer look below.
Best Ways To Profit From A Recession – Step 1 Invest In Yourself
If you really want to build long lasting sustainable wealth, you ideally need to invest in yourself first.
When was the last time you invested in yourself?! Many of us choose to invest in plenty of other things but rarely does investing in ourselves come to the top of the priority list!
For things to change, “you” have to change! Like many top coaches will tell you, change needs to start with you yourself first. You need to invest in order to educate yourself. Sometimes this will involve a change of mindset, other times this change will involve learning new skills.
Either way, the importance of finding a coach who has a proven track record of success and modelling their path, blueprint or framework is one of the greatest ways to get started. We can all benefit from coaching.
My life changed the most when I decided to invest in myself and find a coach who could show me exactly how to reach my goals fast.
You can waste a lot of time to save a little bit of money by looking for free solutions on the internet. Or you can do what those with a wealth mindset do.
You can save a lot of time by spending a little money on a coach who has the experience to lay out the roadmap of success for you to follow whilst they support you along the way.
Best Ways To Profit From A Recession – Step 2 Increase Your Income
This step is often forgotten about but it is very very important! I know it sounds obvious but increasing your income is always important if you are determined to build wealth.
This is even more true during a recession. When prices are going up during a recession and your disposable income is becoming obliterated, you need to ask yourself some powerful questions.
Don’t say that you cannot afford “X”. Why not say, how can I afford “X”. Learn to create the mindset where you are focusing on solutions not problems. Where you set your attention to, your intention follows!
There is a reason why the average millionaire has 7 streams of income. Relying on only one source of income such as that from a job is just not safe in todays economy.
Your earning potential in a job is often capped and during a recession, you would not expect a job to increase your pay just because inflation is high! There is no such thing as a job for life anymore – it just doesn’t exist.
If you were to be made redundant from your job and it was your only source of income, that would be a problem and would create huge financial strain for you and possibly your family.
Increasing your income is actually much easier than you might think. Creating another income stream or two through say a side hustle, is a very powerful way to not only protect you from the effects of a recession but it allows you to be able to invest more so that you can grow your wealth and accelerate the compounding effect over a shorter amount of time. Yes – read that sentence again!
Increasing your income is by far the number 1 most important factor in helping to protect you from the effects of a recession but also allowing you the opportunity to keep “buying the dip” on your favourite assets without you running out of money when doing so!
Buying the dip even when the dip keeps dipping can be a great approach to secure your chosen assets at a discount but only if you know the strategy for how to correctly buy the dip and have enough disposable income each month to do so!
It is those who have the willingness and ability to take the risk of buying the dip frequently and strategically that stand to benefit the most over the long term future economic recovery.
The greatest wealth transfers in a generation tend to happen in recessions partly because you have the opportunity of accumulating a significant discounted asset portfolio that helps amplify and accelerate your future wealth creation.
Best Ways To Profit From A Recession – Step 3 Invest In Financial Assets
If you’ve read my post so far, this step will be obvious! Once you have invested in yourself and learned how to increase your income, you will have the option to use your extra income to invest in financial assets.
Investing in financial assets can be a fantastic way to make your money work for you, especially during times of a recession because you can take full advantage of buying the dip and accumulating your favourite assets at a substantial discount.
Also, because in step 2 you would have learnt how to increase your income, you would now have the financial ability to buy much more and grow your portfolio of discounted assets faster and to a much greater scale.
In the future, when they economy comes out of a recession and asset prices start to rebound, you would be able to see a much greater overall positive return on your investments in the short, medium and long term.
Best Ways To Profit From A Recession – Invest Diva CEO Kiana Danial Video
Best Ways To Profit From A Recession – Biggest Problem
One of the biggest problems when looking at the best ways to profit from a recession is simply not having enough income to be able to take advantage of building your wealth by investing in discounted financial assets.
This is why learning how to increase your income as soon as possible is crucially important if you are serious about building wealth at any time but especially during a recession.
Of course, some of what I am discussing here comes down to mindset. Those who see a recession as an opportunity are far more likely to position themselves to take the action required and to reap the benefits.
Those who focus on fear during a recession will unfortunately likely stand to lose more than they will gain.
Best Ways To Profit From A Recession – Conclusion
In my opinion, the 3 best ways to protect yourself from a recession are to invest in yourself, increase your income and invest in financial assets. This process is in itself a perpetual cycle which you can and should repeat in order to accelerate your wealth building efforts.
I learnt this powerful concept of investing in yourself, increasing your income and investing in financial assets from Kiana Danial, CEO of Invest Diva. Kiana calls this the “Zen Wealth Generator.”
This is the exact concept that she has used to grow her investment portfolio from zero to $5 Million Dollars and rising. This is also the exact same concept that she teaches in her life transformational Build More Wealth 5 Day Challenge.
Using the Zen Wealth Generator concept I personally learned exactly how to build my own wealth ecosystem where your money makes more money and the money that money makes also makes more money to build towards generational wealth. It frees up your time, it compounds your money and it creates generational wealth on the fast track.
I hope you have found this ‘best ways to profit from a recession‘ post interesting, high value and thought provoking!
Question is – are you up for the challenge of recession proofing your wealth?
What would you like to do next? Choose your journey! Would you like to increase your income first or invest your income first? Make your selection below.
Disclosure: This post, 3 Best Ways To Profit From A Recession, may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more information.
Success Coach. Entrepreneur. Investor. Proactively Coaching, Upskilling & Empowering Entrepreneurs To Create Abundance In Their Life & Business.