THE UNFAIR

EDGE REPORT
How to creating wealth during a reccession
When the market is soaring, it’s easy to forget that what goes up can also
come down. But economic slowdowns tend to be cyclical, which means that
another recession is in the future. Whether it’s fast approaching or still a
ways off, it’s wise to prepare for its eventuality. This way, you won’t join the
panicking stampede out of stocks and into cash. Instead, you’ll remember
that stocks can perform even during a recession – you just need to know
which ones. A financial advisor could help you build a recession-resistant
investing plan. Here are five things to invest in when a recession hits.

1. Stack Cash

When the economy starts to look uncertain and becomes volatile, many
investors will begin to panic, pushing money into "cheap stocks" or begin
selling "long-term holds. This kind of sporadic investing will not create
wealth. Sometimes it's best to sit on your hands, create a plan and wait for
the market to steady before investing. You will never time to the top of the
market or the bottom perfectly.

2. Dollar Cost Averaging

As with most recessions, you probably will not see the next one coming. But
you will likely see a sell-off in the stock market well in advance of a
recession. When that happens, remember the first lesson: There is recovery
after a recession. Dollar-cost averaging is when you buy up stock at specific
price points or on a consistent basis (weekly, monthly, etc) regardless of
price fluctuations because you believe strongly in the upward potential of the
company.
3. Seek Out Core Sector Stocks

During a recession, you might be inclined to give up on stocks, but experts

say it’s best not to flee equities completely. When the rest of the economy is
on shaky ground, there are often a handful of sectors that continue to forge
ahead and provide investors with steady returns.

So if you want to insulate yourself during a recession partly with stocks,

consider investing in the healthcare, utilities and consumer goods sectors.
People are still going to spend money on medical care, household items,
electricity and food, regardless of the state of the economy. As a result,
these stocks tend to do well during busts (and underperform during booms).

4. Focus on Reliable Dividend Stocks

Investing in dividend stocks can be a great way to generate passive income.

When you’re comparing dividend stocks, some experts say it’s a good idea
to look for companies with low debt-to-equity ratios and strong balance
sheets.
If you don’t know where to start, you may want to look into dividend
aristocrats. These are companies that have increased their dividend payouts
for at least 25 consecutive years.
5. Consider Buying Real Estate

The 2008 housing market collapse was a nightmare for homeowners.

However, it turned out to be a boon for some real estate investors. When a
recession hits and home values drop, it may be a buying opportunity for
investment properties.

If you can rent out a property to a reliable tenant, you’ll have a steady stream
of income while you ride out the recession. Once real estate values start to
rise again, you can sell at a profit.

History tells us that house prices follow the stock market. However, their
adjustment is normally a year or two delayed. Real Estate is not a sector to
buy right away but will be in a year or so.

6. Purchase Precious Metal Investments

Precious metals, like gold or silver, tend to perform well during market
slowdowns. But since the demand for these kinds of commodities often
increases during recessions, their prices usually go up too.
You can invest in precious metals in a few different ways. The most
straightforward route is buying coins or bars from a seller or coin dealer.
While this is different from buying a security, it’s technically as good as any
other option.

If you’re more interested in buying precious metal securities, turn your

attention to ETFs. These funds are collections of investments within a single
industry, which, in this case, is the precious metal market. You could also
purchase a gold IRA if you’re saving specifically for retirement.
5. “Invest” in Yourself

If you lose your job and income during a recession, you can rebound by
“investing in yourself.” You could go back to school to gain additional
knowledge or skills that could help you get a better job.

Paying down debt is another option if you worry that your job situation
might go south at some point. The less money you have to spend on bills,
the less stressed you’ll feel during an economic crisis.

Bottom Line

If you’re investing for the long term, a looming recession shouldn’t panic
you. You may want to off-load some investments to take some profits off
the table. But for the most part, your strategy should not be to sell when
prices are low. You may think you’ll get back in when prices have stopped
falling, but it’s impossible to call a bottom until it has passed.

Instead, you should hold the positions that you entered as long-term
investments. That said, if you have the cash to invest, you may want to
consider buying recession-friendly sectors such as consumer staples,
utilities and health care. Stocks that have been paying a dividend for many
years are also a good choice since they tend to be long-established
companies that can withstand a downturn.