How to Prepare for a Recession
The common American citizen has grown up listening about the stock market, the S&P 500, the financial crisis that have affected the United States in the past, and of course the Great Depreciation. However, most of these terms do not truly make sense to them, despite the fact that they have listened to these terms around them, they have barely researched them and do not really understand how they can be applied to their lives.
In this sense, this article aims to provide an insight on how to prepare for a recession, but truly, nobody knows how hard a recession would hit and when exactly would hit. Experts in the economy will argue and suggest every American to always have a six-month saving account for cases like this. Meaning that, you always need to prepare yourself for the worst scenario. Always imagine that you are going to lose your job, and nobody will provide you with extra work or extra money. I think that Covid-19 gives the world a 360 change, where people's lives will never be going to be the same ever again. Americans will think twice on how they behave and how they use their money. For what I have been learning in all the different economics courses that I've been taking is that there is no such thing as keeping cash near to your hands. But there is a huge step that separates the people who survive in a recession and the people who take advantage of a recession.
Investing is the right path to overlap a recession. That is the rich people's dilemma everywhere. Finding where to invest their money, to multiply the investment. As we know, the biggest asset in 2020 is data. Knowing where the market is going makes a person the most powerful over others. Apple, Google, Facebook, and Amazon are the richest companies in the world because they recollect the data.
The good thing is that today’s world provides us with a great amount of free valuable resources that we can access through the internet, therefore, learning how to invest is easier than ever before. While your learning process is entirely up to you, in this article we want to provide you a hint of some key steps that you should start looking into if you would like not only to survive the next recession but also benefit from it.
Here are 4 hints of what you should investigate to prepare for the next recession:
1. Trading Forex
- The Foreign Exchange Market provides investors access to a market that is far larger in scope than that of the stock market. Because of its size, the stock market offers greater liquidity, which means that investors may be able to enjoy lower transaction costs and more easily enter and exit trades.
2. Trading Commodities
- For investors, commodities can be an important way to diversify their portfolio beyond traditional securities. Because the prices of commodities tend to move in opposition to stocks, some investors also rely on commodities during periods of market volatility. This provides relatively safer investment in times of financial difficulties.
3. Shorting the Market
- Short selling allows investors to profit from stocks or other securities when they go down in value, therefore, learning how to short the market could help you to benefit from the next recession.
4. Currency Diversification
- We all know the common saying: “Do not place all your eggs in the same basket” Why would you do the same with a single currency? Diversified exposure to currencies just likes in equity or fixed income markets can shield your portfolio from unforeseen risks and help you meet your investment goals.
In conclusion, there are several ways to overlap a recession. The key is to know which ones the right ones are to invest your money. A great tip given by famous investors is to always keep growing assets rather than liabilities and never invest the money you do not have, or you use to cover your basic needs. Keep a budget that includes a saving portion of your total income and never stop from learning more.