Investing Against Recession in 2022 is especially important today given the extended Russian war in Ukraine, which has ushered in a new period of volatility, the chances of South Africa going into recession have nearly doubled since January. The global economy rebounded to new highs at the start of the year, with share markets rising and consumer spending rebounding.
Higher inflation was previously thought to be a one-time blip. However, in March 2022, the global economy took a sharp turn, with skyrocketing commodity prices substantially lowering the global inflation forecast and badly hurting consumer confidence, making markets more volatile.
A recession is far from inevitable, but for the average South African interested in being proactive in the increasingly likely scenario, what are the best moves to make to ensure you are actively investing against recession in 2022? That’s what we are going to take a closer look at here.
Investing Against Recession in 2022
Starting Off on the Right Foot
In order to make the best investments during a recession, you must first assess your personal objectives. Are you attempting to:
- Reduce the chance that an investment will lose value due to market volatility?
- Maximize your long-term profits?
- Create a reliable source of steady income?
- Invest in the stock market while it’s low (sometimes called “buying the dip”)?
While having a portfolio that integrates all of these methods would be ideal, handling even one of them successfully might have a hugely beneficial impact on your personal financial future no matter what the nationwide, or global outlook is. Take a look at the considerations listed below to assist you in creating a plan that is right for you.
Investing Against Recession in 2022
Invest in Core Industry Stocks
During a recession, you might be tempted to quit the stock market, but experts advise against doing so. When the rest of the economy is fragile, there are usually a few sectors that continue to grow and provide investors with consistent returns.
Consider investing in the healthcare, utilities, and consumer goods sectors if you want to protect yourself in part with stocks during a recession. Regardless of the health of the economy, people will continue to spend money on medical care, household items, power, and food. As a result, during busts, these stocks tend to fare well (and underperform during booms).
Investing Against Recession in 2022
Invest in Dividend Stocks
Investing in dividend stocks might be a good way to earn money without having to work too hard at it. It’s a good idea to search for companies with low debt-to-equity ratios and strong balance sheets when comparing dividend stocks.
If you’re not sure where to begin, dividend aristocrats may be a good place to start. This category includes corporations that have increased their dividend payouts for at least 25 years in a row.
Investing Against Recession in 2022
Consider Investing in Real Estate
When the economy tanks and property values begin to drop, it can be a good time to buy investment properties.
You’ll have a stable source of income while riding out the recession if you can rent out a property to a trustworthy tenant. Then you can consider the option of selling at a profit whenever real estate values begin to climb again (and they will.)
Investing Against Recession in 2022
Get into Precious Metals
During market downturns, precious metals such as gold and silver tend to do well. However, because demand for certain commodities tends to rise during recessions, their prices tend to rise as well.
There are several ways to invest in precious metals. Purchasing coins or bars from a vendor or coin dealer is the most straightforward option. While this is not the same as purchasing security, it is technically equivalent to any other investment choice.
Investing Against Recession in 2022
Invest in Yourself
If you’re worried about losing your job and income during a recession, “investing in yourself” can help you bounce back. You could return to school to get new knowledge or skills that would aid in your job search. Given online schooling is extremely popular now, doing so is likely to be far less disruptive than you might think.
If you’re concerned that your job position will deteriorate at some time, another good preemptive strategy is to pay down debt. During a financial crisis, the less money you have to spend on bills, the less anxious you will be. This step is a must and you should continue to do this all of your life, this is not a luxury it is essential, particularly as the working environment is constantly changing and bigger changes are looming.
Final Thoughts
An approaching recession shouldn’t scare you if you’re investing for the long haul. To take some profits off the table, you might wish to sell some stocks. However, selling when prices are low should not be your primary strategy. You might assume you’ll get back in when prices stop falling, but a bottom can’t be called until it’s reached.
You should instead treat the positions you took as long-term investments. However, if you have the cash to invest, consumer staples, utilities, and health care are all recession-friendly. sectors to consider. Stocks that have paid a dividend for a long time are also an excellent choice, as they tend to be well-established businesses that can weather a downturn.
And if you’re unsure of how to build a recession-proof portfolio, one of our financial advisors can help contact us now. These experts can help you make the investment and financial decisions that best suit your unique situation whilst tailoring the options of Investing Against Recession in 2022.
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