There is a lot of focus on how to survive a crisis financially. What about when you have some money set aside that you want to protect?
You may have a nest egg set aside for retirement or some investments you plan to let mature to live off of later. During a recession, these investments can lose a lot of value. And it can happen quickly.
Luckily, the stock market is going strong at the moment. Which gives you time to come up with a plan because there is no guarantee it is going to stay that way. Some people will tell you that this is a good opportunity to build more wealth as buying low and selling high is the way to go, but for the sake of this article, we will focus on the protection of wealth rather than growth.
Let’s take a look at some ways you can protect your money during a recession.
1. Invest in gold and crypto
All you need to do when the recession hits is to have a place to park your money for a while until things blow over. Ideally these money parking lots will not only protect your money against any losses but may also make you a little profit in the meantime. That isn’t the goal, but it would be a nice perk.
Usually, things not tied to fiat currency are going to provide that. Things like gold, silver and cryptocurrencies like Bitcoin. All of these things can lose value so this is not a guarantee that you won’t come out behind. Since people use these as a way to hedge their wealth, they are generally a good idea.
Gold has been the favorite for a long time since so many people use it as a way to store a value so usually, the value rises in times of crisis. When the economy is good, the value tends to drop or plateau.
Crypto is seen as being very volatile, and it can be. Yet, if you look at the charts of Bitcoin for the last 2.5 years you can see that it generally holds its value well.
If you don’t know how to buy Bitcoin, it is fairly easy. You set yourself up with a digital wallet which is basically a spot on the blockchain where your money is located. You get some access keys and then you can buy and sell Bitcoin from the wallet.
2 – Buy the right stocks
Even when the stock market is falling, there are some stocks that prove resilient and can potentially give you a return. All you are looking to do is come out even so any profit is a bonus.
Core sector stocks are a proven slow and steady return and generally do well even during a recession. Many of these stocks are in companies that provide things like medical care and devices, household items, and other necessities. As you can see those types of stocks shouldn’t fall even during a recession.
3 – Look for discounts
There are many ways that investors can save money and protect what they have in the bank with companies across all industries struggling. Of example, some auto insurers such as GEICO and Allstate offer 15% premiums on plans that have either been or should have been bought in the next six months. This is 15 percent more money than theirs in your wallet you should always consult a financial planner in case you are facing a hard time in this crisis.
4 – Diversify Your Income
The expression “do not place all your eggs in one basket,” is common to all of us, and this adage can refer to your income stream. Banking on the job alone with your entire livelihood has the intrinsic risk because you lose the sole revenue and capacity to fulfill all the lending commitments if the economy crashes and you are losing the work.
5 – Live Within Your Means
You are not likely to get into debt when gas or food prices are rising and more likely to adjust your spending elsewhere in order to compensate if you are used to living within your means each day during the good times. Debt creates additional debt if you can’t quickly pay it off.