Not a lot of people know this but the effects of a total market crash can be mitigated with the right investments.
This means that even though the economy starts going down the drain, your portfolio is still growing steadily.
Of course, everyone knows diversification can help balance a portfolio but what exactly should you be investing in when everything looks awful?
Let’s find out…
For some reason, there is a stigma around investing in gold, that it’s a risky investment or that you can’t make money doing it.
We can blame all those late-night commemorative gold coins and cash-for-gold commercials for that.
The truth is the gold is a solid investment.
Why? Because gold holds its value, unlike fiat currency.
Paper money is common and can be created, but gold is a rare metal and there’s only a limited amount on earth.
So when the market gets a downturn where do people go to keep their money’s value?
They invest in gold.
So if you’ve already invested and had the gold to sell, you can make a continuous profit through a recession, because you’re holding something that’s still valuable.
Essential industries will keep their value when the market crashes because no matter how bad things get, people will still be going to Walmart, the dollar store, McDonald’s and they’ll still order things off of amazon.
These companies have universal demand and there’s nowhere else for people to go for what these companies offer.
We’ve seen during the pandemic that companies like Amazon and Walmart are doing even better during the recession because they have the lowest prices and widest reach, so the government will subsidize them.
They are too essential to fail.
Things like art, luxury watches, and exotic cars hold their value and even gain value over time.
This is why rich people buy them.
It’s actually cheaper to own a Rolex than a normal watch because when you own one, you can sell it afterward for more than what you bought it for.
If you buy a forty dollar watch, that money is gone for good.
This is why see rich people having garages full of exotic cars.
Yeah, they might like driving them, but they are gonna go up in value as long as they don’t wreck it.
If you invest in things like this, then you could probably sell find buyers when the market is down, because the rich prepare for financial catastrophe and are unaffected by whatever the economy is doing, unlike normal people.
If the markets in your home country go down, but you are well diversified in foreign countries that are doing well, then your portfolio is still going to be growing during the dip.
You’ll even come out of a recession with a sizable increase in net worth if you invest your foreign gains into your holdings that aren’t doing so well.
When an economic downturn occurs, those with the capital to invest will find themselves overwhelmed by the opportunity to make money by buying valuable stocks at very cheap prices.
Bonds are a good investment specifically in the case of an economic crash.
When you are issued a bond, a company or the government is required to pay you back (with interest) over time in specific amounts, no matter what the market looks like.
So while you won’t profit like you would with a stock in a good economy, you’ll have a reliable capital source during a recession to invest in valuable companies.
When an economy is going well it can feel like you’re missing out if some of your money is in things like gold or bonds…
But when stuff hits the fan, you’ll be glad you invested the way you did.
Diversify in good times so you can still invest during the bad times.
Ray Dalio On The 1937 Market Crash And Why It Matters Today
How To Make Millions In A Stock Market Crash
When Should You Sell Your Stocks?