5 Reasons To Invest During A Recession
Now that the government is back in session, the overall economy appears to be strong for the moment. The stock market is “stable”, real estate is hot, and most are optimistic about the future. However, as they say, “What goes up, must come down,” so what happens when the economy takes a turn for the worse?
**If you own a house that needs work, NOW is the time to sell to get the most $$ out of your house, when the economy is good! The offer won’t be the same as the fully renovated one down the road, but it’ll be better than one during an economic crash.
How Do People React In A Recession?
- Out of Fear – Human beings, in general, have an inclination towards fear, especially when their surroundings seem out of control.
- With a Lack of Faith in “The System” – They sell all their stocks and liquidate because they don’t trust the economic system and don’t understand the cyclical nature of an economy.
- They become “Prudent Pessimists” – The Prudent Pessimist doesn’t see hope for the future. They pinch their pennies and save in an attempt to re-gain control. (A wise move, especially if one has taken a financial loss.) But worst of all: they stop investing!
To paraphrase Warren Buffet,
… the market may go up, the market may go down, the economy may fluctuate, but there will always be intelligent things to do.
As real estate investors, I can tell you from experience that we missed a huge opportunity during the last economic down-turn. (Granted, we didn’t know we were investors at the time; we’d just bought our first flip.) If we had only known these things and prepared a bit better, I believe we would be in a much better place today.
5 Reasons To Continue To Invest In A Recession
**Notice the title says “continue”, which implies you are already investing. If you aren’t currently investing, you should, especially in real estate. Let’s talk about that. Subscribe to our newsletter and you can get the inside scoop.
During a recession everybody else is running away, but my inclination as an investor is to move in. Here’s why:
- The concept of “Buy Low, Sell High”. Home prices are much lower than they will ever be in a recession. It is a season for buying: buying and holding.
- An abundance of investment opportunities: More sellers willing to sell.
- Less competition: “Prudent Pessimists” are scared away by fear and uncertainty, creating the perfect funnel for an investor.
- Lower material costs: During a recession fewer people are doing new builds and home-improvement projects. Manufacturers have an increase supply of material, pushing prices down.
- Cheaper labor: In addition to lower material costs, labor prices are generally cheaper, because construction halts.
For the wanna-be investor, a recession gives you the opportunity to get in the game and diversify your investment strategies. What do you do in the meantime? SAVE YOUR $$$ and make WISE INVESTMENTS.
For the experienced investor, an economy shift grants you a chance to make intelligent decisions that can positively affect the trajectory of your life, turning potential financial disaster into financial wins.
Although we can not give specific investing advice, we can share in our opinions and experiences – and have quite a few under our belt by now. These are the reasons we await the next recession with a bit more optimism than most. We look forward to the day we can link arms with our most trusted private lenders to capitalize on opportunities in front of us.