Taxes are one of the certainties in life, but recessions are also inevitable. No matter how great the economy is doing, the next downturn could be right around the corner. There is not a lot you can do to stop the next downturn from coming. Recessions happen on a fairly consistent basis, and not even the experts know exactly when the next one will come along. In the meantime, you can live your life in a frugal manner, spending beneath your means, paying yourself first and investing in an intelligent manner.
If you do these basic things, you could find yourself welcoming the next recession instead of worrying about when it will end. Economic downturns bring enormous pain to millions of ordinary people, but for the well prepared, recessions can actually be amazing opportunities. Here are some ways to profit from the next recession, so you can emerge from the economic downturn in even better financial shape.
Explore Expanded Unemployment Benefits
When recessions strike, the government generally responds with programs designed to lessen the burden and help workers survive. These stimulative measures often include expanded unemployment benefits, giving laid off workers a bridge between the job they lost and their next employment opportunity.
If you have lost your job, or fear you might be laid off soon, research these expanded unemployment benefits and estimate how much you might receive. Laying the groundwork now will help you later, so you can start receiving the benefits you have earned as quickly as possible.
Stock Up on Essentials While Prices are Low
In many cases recessions are accompanied by declining prices, a phenomenon known as deflation. And while deflation is bad for the economy as a whole, it can be good for you if you are prepared to take advantage of the buying opportunity.
If you have an emergency fund in place and adequate savings, a short period of deflation can be welcome news. Stocking up on essentials now and filling the pantry with shelf-stable food will mean one less thing to worry about later.
Look for Stock Buying Opportunities
When a recession hits, it can be scary to watch your stock portfolio plummet in value, but the temporary decline could be a wonderful buying opportunity. Instead of fretting over how much you have lost, think about buying more stock and additional shares of your favorite mutual fund while prices are down.
Recessions have come and gone throughout the years, and time after time the stock market has always returned to new record highs. And while past performance is no guarantee of future success, the odds are definitely in your favor. Recessions can be dramatic, and profitable, buying opportunities for the well positioned stock market investor.
Build Out Alternative Streams of Income
When recessions strike, they take millions of jobs with them, leaving previously unemployed workers struggling to make ends meet. But once again the well prepared fare much better, and you can too.
Even if you do not need the extra income, taking on a side hustle or investing in dividend-paying stocks could pay off big time when the next recession hits. Having more than one income stream can protect you from the loss of your full-time job and give you additional breathing room as you search for new employment.
Research Recession-Proof Industries
A recession can devastate the economy, but not all industries will be impacted and not all companies will be affected in the same way. From healthcare to consumer staples, many parts of the economy are immune from economic downturns, or at least far less likely to be severely impacted.
Now that you have the time, why not research these recession-proof parts of the economy and look for ways to turn them to your favor. If you are looking for a new job, signing on with a company that is relatively shielded from economic cycles can help you preserve your earning power. If you have money to invest, buying stocks in these less economically sensitive businesses could maximize your long-term gains and provide a steady stream of dividend income.
Recessions happen, and economic downturns are an unfortunate fact of life. It is only a matter of time until the economy enters its next rough patch, but you do not have to take the pain lying down. With the right preparation, the next recession could actually be the opportunity you are looking for, and now is the time to get ready.