Thursday, 2 April 2020

How To Make Money Investing During A Recession

In today's article, we are going to be talking about how to make money investing during a recession. Recessions come around every once in a while, we may actually be in one right now at the time of writing this article, especially the Coronavirus. But what they do is they actually create massive investment opportunities for those who are well prepared. In this article, we are going to talk about 2 asset classes to build wealth during a recession.

Let's Get Started

1. Real Estate

Real estate has created more millionaires than any other asset class out there. I'm just going to give you a real-life example of someone who I personally know, I know someone in 2013 that bought a bunch of HUD properties off the auction site that needs little to no upkeep or maintenance, very little repairs and they're in B Class rental neighborhoods. He now owns about 5 of these.

  • Property: $30,000
  • Rent: $1,000 Per Month
  • Worth: $100,000
  • Cash Flow Or Cap Gain

The purchase price was literally $30,000, he probably bought them cash. The rent is now at about $1,000 a month if not more. And then the property is actually appreciated from that $30,000 of when he bought it in 2013 to about $100,000 now. So let's dissect this, you can either keep this property for cash flow or you can sell it for a capital gain. It is either like flipping a house and making a nice big chunk of capital gain for every little skin in the game or you can keep it as cash flow. Imagine having $6,000 a month of gross income coming into your pocket minus some expenses, you can potentially be finally free. There is no headache whatsoever when it goes into owning the rental property it just runs itself. This is one of the biggest wealth-builders that you can take advantage of during a recession 

The cool thing is that this person now has a dividend that pays him and they also have the ability to sell as mentioned. 

2. Blue-Chip Dividend Stock

  • Criteria
  • Share Price

The reason I like blue-chip dividend stocks during a recession is that ultimately it is a great way to create passive income later in life. So this is not a get-rich-quick scheme, this is not something that you just wake up 5 years from now and you are a multimillionaire blue-chip dividend stock investor. This is something that is going to take a lot of time with a lot of reinvesting in these dividends. But the reason I like this during this recession is that the price per share has been cut significantly even though the underlying companies are typically still solid. aka, blue-chip.


What we are talking about in my criteria Is companies that have raised their dividends consistently year after year at least over the course of 10 years. Typically I really like 15 to 25 when you are getting into the dividend aristocrats, but at least we are looking for 10 years of dividend growth, with the growth of the dividend you are looking at least 2%. The reason for this is because CPI (The Rate Of Inflation) is typically been around 2½%. So I'm looking for these dividends later on in life to at least keep up with the rate of inflation. That way my purchasing power is not being eroded. 


Invest In Yourself

You need to invest in yourself. Unfortunately during a recession, people get laid off, when people get laid off you have some free time, at first, you are excited and you are depressed, and then it is a whole mix of feelings depending on whether you can find another job or not. But ultimately what I have found is in times during extra time on your hands or times during recessions when you may get laid off. It is best to invest in yourself. So if you are laid off, learn a new skill, start a side hustle, spend some time forging relationships with your network that you may have neglected by being super busy throughout the years of just being employed. 

On Linkedin, if you don't have a Linkedin create a LinkedIn account then start to connect and reach out to people for strong relationships and also forge relationships with your loved one and your family members. A family that I have found is the number one support network in times of crisis.

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