Secrets to getting RICH during Stock Market Crash or Recession
Let’s face it. We’ve known for a while now that a recession was coming, I’m sure you’ve been hearing for the past couple of years at this bullish market couldn’t last forever and with the global spread of coved-19, we have finally seen these financial gurus predictions come true.
For many, this global recession means losing their job, seeing the retirement of kind of evaporate, or even losing their homes. And while this is tragic to put it lightly, there are always opportunities even in the darkest of times.
This is why in this article I will share with you five ways to profit during a market crash.
Now we know that during the un-certain time, optimizing your finances may be the last thing on your mind. But, I wouldn’t be doing my job if I wasn’t sharing with you how to not only survive the current recessionary period we’re facing but how to thrive and come out better than you could have ever have expected.
This is why I believe that reviewing your finances and making smart decisions must be on your agenda during this tumultuous time.
Instead of sitting around trying to gauge the market bottom and trying to predict when things will turn around. I recommend you focus on these five key areas.
1. Control your Emotions
Number one is controlling your emotions. The first thing you must absolutely do during a recession is to keep your cool. If you’re big into investing times of financial recession can have you seen your portfolio dropped 30, 40 or even 50% or more, and it certainly doesn’t feel good.
For those who invest with money. They simply cannot afford to lose. Their initial reaction to seeing their holdings dropped this much is to put their money in the salvage what they can.
Unfortunately, this quickest way to ruin your financial state and avoid making a profit during a market crash. Now, let me add one caveat that if you need to put some money to cover your core expenses of utility is in groceries, then that’s fine. But otherwise, you need to let your money right out of this financial hardship. And here’s why.
You see when the market declines and you realized double-digit decreases in your portfolio holdings, cashing out your money makes it nearly impossible to recover.
Think about this. If you were to invest in a stock or an ETF What would you deem a good return 5%, 7%, getting a 10% return would have you jumping for joy.
But when you pull your money during a recession, you are basically slashing your wealth because achieving the 40 to 50% return, you’ll need to get back to parody is nearly unachievable.
That is unless you leave your money and allowed to recover.
Even as someone who’s been investing for a decade. It’s easy to lose sleep over the day to day fluctuations in the stock market, but you have to realize that you were investing for the long term.
Unless you were retiring tomorrow. Then you are probably investing to build up whilst over the next few decades, which is why you need to employ emotional control now.
Also, one important point to note is that recessions are a relatively routine occurrence in the market.
In fact, there have been 33 U. S recession since 1854, and investors who held onto stocks eventually came out ahead every single time.
2. Have Cash Available
When it comes to recessionary times, Cash is King. You see, I typically preached that holding your money in cash isn’t the best idea because the longer it sits in your bank account the more it erodes due to inflation.
That 1 to 2% erosion over time decreases the value of your money. However, during recessionary times, I think we can all agree that losing 1 to 2% is much better than the 40 to 50% that many people have experienced in the market.
This is why your first goal is to build an automated system to create cash. To do that, I want you to automate your savings and be deliberate with your investing.
Let’s start with your savings. You want it to be available, accessible, and unaffected by the market. Your savings may not make money, but they will first ensure that you have the cash to buy the bare necessities during these harsh financial times and well, also allow you take capitalized on opportunities that present themselves.
Now some of you may be saying that you have a little cash and so your potential for capitalizing on investment opportunities are non-existent. But that’s definitely not true. If you were already tight on cash and cash flow isn’t strong consider refinancing loans in this low-interest-rate environment.
This can be business loans, mortgages or even car loans. The key is the lower your out-going cash requirement and have cash on hand to weather the storm.
You might even consider taking on new loans if the rates are low enough because of the market’s rebound. Your return will be much greater than the debt interest rate, allowing you to profit the difference. Besides having the cash, you want to be ready to buy when the time is right, of course, no one can time the market floor.
Generally, when stocks have declined in the double digits, they’re ready to be bought. If you were willing to hold them until the market fully recovers. However, in order to capitalize on these events, you need to be prepared, and one way to be prepared is to have a watch list. It’s a extremely difficult to make rational decisions on a day where the S&P 500 is up or down 5% or more.
Quick Note: Read this entire article and then also read the following article: Learn these 7 Money-Making Skills this Year.
Now let’s continue.
Investors that make buy or sell order is based on fear agreed typically don’t perform well over the long term. One way to avoid impulse trades is to create a watch list of stocks you were interested in buying well before they hit your target prices.
While creating a watch list, you can take your time and performing your due diligence and learning and analyzing a stock well in advance before you actually pulled the trigger. During the next big Down day in the market, you don’t have to scramble to react. Just trust in the work you’ve put together beforehand and buy the stocks on your watch list.
Now that you have cash and your watch list. You’re in a position to thrive in profit. If you see the stocks you’ve been eyeing decrease, then perhaps it’s time to executed trade or maybe you want to get more creative in ways to profit during this time.
For example, my friend Mike is currently building up a real estate portfolio by capitalizing on homes that have been seized by the banks.
As I said earlier, there are many people in very dire financial positions, and, sadly, many of them have had to turn in the keys to their home. Since the bank doesn’t want to hold these properties, they often are willing to sell them to individuals at ridiculously low prices.
3. Renegotiate with Everyone
Number three is renegotiating with everyone. Being in a recession is a unique position for those who have debt because it offers you a very good opportunity to negotiate rates with literally everyone you send money to on a regular basis.
Most people deal with are credit card companies. These companies are no different than any other business and even in times of recession, they want to ensure they’re getting paid.
However, many people simply cannot pay them during these hard financial times and as such, they become much more open to negotiation. For instance, there is no reason you can’t call up your credit card company and explain that you cannot afford to continue paying your 20% interest balance but at 16%, maybe you could.
Companies are much more willing to make compromises on these things during recessionary periods, and this is your time to capitalize.
Beyond renegotiating, you should also be looking into refinancing. If you have a credit card, you could look at refinancing it into a car loan, which will lower your payments.
You have a mortgage with a lot of equity built up. If you do, refinance it and pay off a business or a student loan.
Right now is the perfect time to make smart decisions and one that could be very lucrative if you can lower your rates on every single bill.
4. Pay Down your Debt
You might find this method of profiting during the recession, a little bit obscure, but think about it for a moment.
Having debt is the opposite of having an investment. The only difference is that holding onto debt is often more costly than investments are profitable. Yes, even during a recession.
Now I want to recommend that you pay down your debt during a recession versus investing heavily into the market for a few reasons.
- First is the actual return
Even during recessionary times, the chances that you were able to secure a large return, especially in the short term is rare. Maybe you see that stock you bought realized a 10 to 15% return. That’s great, but you know what else will give you that much of a return paying down your debt?
When I say paying down your debt in this case, I do mean your credit card debt even if you were able to renegotiate lower rates say, from 22% to 18%. This will still be a better return than most stocks.
- Continuing to hold onto debt hurts your cash flow
Instead of having more cash on hand every month to savor and invest, you’re sending a payment to your creditors instead.
Finally, the reality is that many people are simply turned off by the thought of investing during a recession. Just thinking about how much they’re performers have declined makes them uncomfortable. And if it sounds like you, then don’t worry, because there are other ways to thrive during this tough economic time. Focus your free cash on paying down high-interest debt.
One way to do this is to make sure you’re dead is organized. Normally I advise that you organize your debts from lowest balance, the highest balance or from highest interest rate to lowest interest rate, depending on your debt repayment preferences.
But if you want to maximize return during this recessionary period, then you need to follow the debt avalanche method and pay down your debts with the highest interest rates first this way.
You can eliminate the costliest debts and secure the highest returns possible.
5. Invest In Yourself
I know that investing in yourself sounds like cliche advice, but it’s so often recommended for a reason, and that reason is that it works.
During recessionary times, especially during the coved-19 pandemic. Your normal social routine has been broken, which means more time at home.
This is where a choice exists.
You can decide to use all this extra free time to play video games or watch every single TV show a movie on Netflix or
you can leverage this free time to get yourself ahead.
I’ve personally been reading a lot more during this time of social isolation and taking online courses to continue to improve my knowledge and I recommend the same for you.
I can promise that playing video games will not help you profit when this recession finally ends. But investing yourself certainly will.
Maybe that’s through reading more books. Reading the different articles on Make Money Online category page, where I teach you how to make more money or just watching videos on YouTube.
While many people can only see this pandemic is being detrimental to their life. Those who will come out of this even stronger are the ones who make the right decisions now and use this time to better themselves as much as possible.
I hope this information helps you. Please share it with your family, friends, and social media.