How to make money in a recession: Feature Article
The first thing that goes through people's minds when they think of a recession is usually a worst case scenario. People think of the most catastrophic situations where they loose all of their money and end up impoverished when really there are plenty of ways not only to remain financially secure but also to actually make money in a recession. Recessions are different than a depression in that recessions affect far fewer people and the people that are affected generally belong to specific groups of industry. But it is the ripple effect that tends to make a recessionary period seem more far reaching than it may actually be. This is in no way meaning that recessions are nothing to be worried about, they are real and real people loose real jobs and are out real money, but so long as you are able to adapt to the changes that the recession may have on your particular stream of income you should be just fine.
You have to know how the market behaves
In order to know where and how best to make money during a recession you must first know the basics of how the market behaves and how that behavior is being affected by the recession. As was stated previously, there are definite market segments that are hit harder than others. Generally three things happen to the market when there is a time of recession. First, the stock market clearly reflects that household expenditures are being reduced. When people spend less money, companies make less money and when companies make less money their share or stock prices go down. The second market sign of a recession is that the lack of product demand leads to a decrease in company inventory. When less inventory is needed fewer employees are needed less. This means that unnecessary workers are laid off and that unemployment rates rise. The third sign of a market in a recession is the general decrease in wages that results from the fact that work has become harder to find. When people make less money, they spend less money and the cycle is repeated.
Making money through investments during a recession
Most people who have invested in the stock market realize that the market will experience some highs and some lows over the course of time. Those with long term investments are concerned about how the market is performing today, but generally not so much so that they take drastic measures such as to completely rearrange their investment portfolios. Generally it is those individuals who are looking to take advantage of their investments in the near future or who already have very risky investments that begin to get worried.
Ironically this time of market uncertainty is generally the best time for any kind of investor to be buying stocks. In fact, it is said that times of recession may very well be the times for the greatest investment opportunities of a person's lifetime. If you are smart enough to take advantage of a situation where you can buy stocks for much less than what they are really worth, you will be rewarded once the market bounces back. There is nothing wrong with stocks just because the price of them is going down. By buying now you will be sitting pretty while other investors wonder why they too did not take advantage of this stock market investment opportunity.
Tips for making money during a recession
During a recession the news is filled with negative statistics, warnings, and economic projections that can scare any investor let alone those who are just trying to get by. Many people are looking to err on the side of caution when it comes to making their investment decisions. People fear what they have to loose rather than receive a boost of confidence in times of a recession. Behavioral patterns are a huge part of why a recession is what it is. But even simply having an understanding of these behavioral patterns may be enough to give you the edge that you need not only to remain financially secure during a recession but also to use the recession as an opportunity to make even more money.
Think "expansion;" that seems to be the most popular piece of advice when it comes to making money during a recession. While most people are looking to save their money during a recession, it may actually be in your best interest to spend money. The cost of all kinds of services will be reduced and many investment opportunities that may have not been within your grasp before suddenly become available. Investing in real estate is one of the best ways that you can make money. It will take some time and you will need to wait until the recession is over to cash in on your investment but for relatively little work you can see great returns.
If you are not looking to invest but may be looking to move up in a company or to further your own small business, there are a number of things that you can do to work towards these two goals even during a recession. First, if you are at a job where you are looking for more job security or to move up in the company, the most important things to do during a recession is to play a key role in helping the company save money. A recessionary period is not the time to pitch any plans that involve risky money management. On the contrary, proposing plans that stretch the company's dollar and completely exclude any need for budget spending justifications are best.
Whether you are working for someone else or for yourself, you can also make money during a recession by thinking outside of the box. Be creative in how you analyze your method of conducting business, your products and job duties. Try to find a way of offering more product or more of what the customer wants without sacrificing too much of your profit. Another tip is to always remember who keeps you in business. Your business contacts and return customers are the ones that you need to be focused on satisfying. Be quick to respond to their concerns. Make sure that you follow up on sales to ensure that you have met or exceeded the customer's needs. Make sure that they are the first ones to know about discounts or special sales that you may be having. Communicate the benefits of working with your company without actually saying that your client is benefited by working with you.
One last suggestion for making money during a recession is to diversify your sources of income. Job loss is an unfortunate reality of being in a recession. You can protect yourself from becoming a victim of faultless lay-offs by having a back-up plan. This back-up plan could be a side business or small business that allows you to make money from doing something that you are good at. It would be even wiser for you to take the mentality that many people are in during a recession and somehow create a business that appeals to those who are being affected. For example, during a recession people find it safer to repair or maintain the materials that they have rather than going out and spending more money to buy new. By setting up a side job at a repairman, you can provide these people with the services that they need at a price that they are willing to pay. Everyone benefits.
Good businesses to be in during a recession
While there are plenty of businesses that need to cut back and even lay-off employees during a recession, there are other companies that actually benefit from a recession. Some of these businesses always benefit or at least remain unaffected by a recession while others find recessionary benefits as a pleasant result of timing and consequences. Take the health care industry for example. Health care is more expensive than ever before, and the health care community provides more services than ever before. As the baby boomers age, the market promises to grow ever larger for products and service that help people live longer, live more comfortably, and live more enjoyable in old age. Right now is the time to be in the health care industry because regardless of what effect the recession is having individuals will still need to have health care services.
Death, debt collection, and repair services are other industries that do not stop for a recession. Funeral parlors still receive virtually l the same amount of business. Debt collection work may actually be a very lucrative line of work during a recession as more and more people become unable to pay their bills and must have their assets re-possessed. Repair businesses, as was briefly mentioned before, are also going to thrive in times when money is tight because individuals see the value in maintaining what they have now to avoid more costly repairs or the need to buy new replacements in the future.
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