Best Investment Strategies To Adopt During A Recession

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Introduction

  • Do you know how to use the pandemic to your advantage when it comes to making the right investments?
  • Are you aware of some areas, which are showing strong performances in growth and ROIs even during the pandemic?
  • Have you tried finding of industries and businesses, which are already bouncing back from the adverse effects of the pandemic?

For a seasoned investor, every crisis looks like an opportunity. This is the reason why some of the investors always look at businesses, which have started during an economic crisis.

Think about the early investors in companies like Uber and Air BnB. Both these companies started during the last recession and transformed their parent industries (transport and hospitality).

In this article, we are going to look at the best investment strategies, investors can adopt during the Coronavirus recession. We are also going to look at some challenges investors might face during the pandemic.

Should you invest during the Pandemic: Opportunity or Risk?

The COVID-19 pandemic might be spreading a lot of bad news about the world’s global markets. However, as an investor, you know that investments are for the future, and not the present.

If you have read the Rich Dad Poor Dad summary, you know that a good investor seeks to invest in an asset, which has tremendous potential for the near future. Seasoned investors suggest that the goal is to strike a balance between caution and aggression.

It is important to be cautious when it comes to making decisions. This involves considering the risks, doing your research and making informed decisions. Aggression involves not sitting on an opportunity for too long a period, especially when it is staring you in the face.

Looking at assets and companies, which have low debts, great cash flows and sound management should help you make headways with investments.

4 Areas of Investment you should consider during a Recession

  1. Real Estate-

While scared investors might look to pull money from real estate investments, the brave ones know that this is one area, which is going to bounce back the hardest. This is the best time to invest in residential real estate. All you need to do is pick up properties on the low and wait for the market to return to gold standards within the next two years.

2. Start-Ups-

Rather than investing in traditional stocks, it is much better to pick up equity in rising start-ups. This is because; startups are high growth and rapid valuation of business assets. They can control or check pricing issues, and take aggressive decisions to ensure survival. Being private limited companies also allows for zero governmental interference.

3. Gold and Silver-

If you know your basics to Investing 101, you will know that buying precious metals acts as a strong hedge against inflation. In any recession economy, chances of inflation are very high. In order to protect the value of your assets from depreciating, it is always good to pick up some amount of precious metals like gold and silver to help tide over the recession.

4. Cryptocurrencies-

Cryptocurrencies like Bitcoin, Litecoin and Ethereum are emerging as a credible avenue of investment for seasoned investors. This is because, Bitcoin and other crypto showed their strong sides during the pandemic, registering impressive bull runs, right through the last five odd months. Many experts are also calling them digital gold, for their hedging properties.

The Final Word

Sitting on your money during the recession is going to decrease its value. This is because some areas of investment are likely to see a downfall in valuation during these times. This is why a good investor is always proactive and moving around his investment to areas, which show promise and opportunity.

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