Should I Invest During A Recession?
COVID-19 hit the world in 2020, and this was just at the time experts were predicting another recession. Now, it looks like we are set to see one of the worst slumps of our time. However, this doesn’t have to be all doom and gloom. For some, the last recession saw an opportunity to make money, and it really worked. So, is entering another period of economic crisis a good time for you to consider investing?
Firstly, it all depends on your current financial situation. No one should invest money if they don’t have money to lose. Investing during a recession is a high-risk strategy. With this risk comes a greater reward, but you do need to be prepared to lose. If you haven’t got the money to accept a loss, then don’t gamble with your future.
Property is going to start falling in price rapidly. The sad reality of a global economic crisis is that people will need to liquidate, fast. Some property investors will want to release equity to help stabilize them through the coming years. Homeowners might find they can’t keep up the payments on their mortgages and need to sell the homes quickly in order to keep their heads above water. This is a great time to find a wholesaler. This is someone who agrees to a contract with the seller at a low price, then sells to you and makes a profit in between. You can either purchase property with your own money or take advantage of good bank rates as we hit a recession. Companies such as Visio Lending specialize in this type of transaction and might help you build a little property portfolio.
Investing in shares can be a higher risk. With property, you have a tangible asset which at some point will go back up in value, especially if you buy at the right time. Shares are similar, and they go up and down all the time. However, during a recession share prices don’t just fall, companies can go bust. Here is where the risk becomes high. If you have no experience of the stock market, then you are literally gambling your savings. You need to have a specialist investment advisor or a strong knowledge yourself. Currently, there will be investors that want to sell shares; they may have stronger propositions and will focus on those. This is your time to buy up shares at the lowest price and then sit on them until we are the other side of the downturn. Providing the company makes it through, it’s likely you will see a greater return, and when confidence goes up, share prices rise, and you could sell and make more money.
Deciding to invest is personal and not something you should leap into. Talking to an independent financial advisor and an investment specialist will help you understand if it is the right thing for you. Make sure you know all the risks and accept that you could take a gamble and lose.