Don’t Fear Recession. Fear lack of Financial Education.
As countries start tumbling one after the other into recession, fear takes hold and most people panic. What happens if I lose my job? Will I be able to pay my mortgage or rent? How do I pay household bills? There are, a myriad of fears that race through people’s minds. They are genuine fears, yet, the one thing they should fear is not even considered. The fear of not having enough Financial Education to be able to make the right choices for the economic climate.
Opportunities for Investors
When I speak about the difference between Investors and Traders, I cover how patient an investor has to be. They have to patiently wait for the magic of their investments to start producing results. I liken it to watching paint dry. It is painfully slow when you first start investing and while you wait for your investments to get to the level where they can support you.
The other part of patiently waiting, is waiting for the investment opportunities that abound at certain times in certain economic times. As a bullion investor, I have been patiently waiting for 20+ years for the gold and silver to reach a specific level for investments. I am still waiting and expect to be waiting another 4-5 years or more to get the results I expect from bullion investments. I know the market will get to where I expect it to be so I can take advantage of the investment I have made in bullion. I know because I spent years learning about Bullion Financial Education.
Within investment categories – I teach 4 categories – Business, Property, Paper and Cash – there are always ups and downs in each category. Recessions are exactly the same, some investments within each category will go up and some investments will go down. Financial Education will teach you what to look for and how to position yourself to take advantage of the situation. For instance, in a previous blog, I spoke about how in business, some traditional businesses will struggle in a recession, but how there are businesses which will thrive in a recession. Owning one or two businesses will allow you to use the economic markets to your best advantage to grow your wealth and support or even improve your current lifestyle. These do not need to be big businesses they can be side hustles that can produce regular income for a small amount of regular working hours per week. Often an hour a day will have significant benefits.
There are businesses which thrive in a recession such as franchises and network marketing businesses. These businesses attract dedicated people who have lost jobs and are looking for some way to make income. They are dedicated and have a sense of urgency to generate an income. Many of these people will make a success of a business because they know the feeling of being made redundant and don’t want to find themselves in that position again. They work hard to make their business ultra-successful.
Financial Education helps you to see the opportunities that exist no matter what the financial markets are doing, no matter whether there is a recession or not.
Making Money in a Recession
There is no doubt, investment opportunities are different in a recession. However, preparation for a recession is key. People who have been building assets and then watch the indicators that a recession is on the way will usually have prepared for the situation by selling some investments and moving into cash. As they say, cash is king.
Cash will allow you to take advantage of lower priced assets which can be purchased with the cash you have.
Bullion is another cash asset which depending on the markets and the metals ratios will let you leverage money to take advantage of the ratios. For instance, when the Gold:Silver ratio is high you purchase silver. As the Gold:Silver ratio drops you sell the silver and transfer into gold. Then continue buying gold. Silver is the leverage to get into gold. The key to remember with Gold:Silver is not how much gold or silver costs but rather the buying power it has in a recession. If during good economic times it takes 100 gold coins to buy a property what will it take in turbulent economic times. The cost could be 50 gold coins or 10 gold coins. It’s purely guessing at this stage depending on the depth of the recession. However, if you bought 100 gold coins when they were cheaper and then were able to buy 2 houses or 10 houses, with the bullion, as the price of houses comes down and the price of gold goes up. What is your buying power?
Transfer of Wealth
It is often said that during a recession there is a transfer of wealth. But what does transfer of wealth actually mean?
For people who prepare for a recession, it means they have built income producing assets, investments, in all 4 categories of business; property; paper and cash. They balance each of the investments with each category so they always have an asset which is going up in value if another is going down. This is called hedging. A way of protecting what you have.
Investors will ensure they are earning income from as many of the 8 income sources as possible guaranteeing and protecting cashflow. This means they have plenty of resources to purchase more income producing assets when they need them the most.
As an economy starts to recover, those who bought more assets during the recession will see their wealth increase dramatically. By how much is unknown. But this increase in wealth is known as the transfer of wealth.
As countries head into recession, what will you be doing to protect yourself, your family and your financial future? Financial Education is key to this and is not a luxury but a necessity to ensure you make the best decisions you can in the circumstances.
Don’t fear a recession. Fear lack of Financial Education.
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