Economic headwinds are blowing against the UK. According to a July 2022 Bloomberg survey, 45% of top economists surveyed think there could be a recession in 2023 – three times as many as in January 2022.
During times of recession, it may seem that every security is on a downward trajectory and there’s nothing you can do to capitalise on the situation, but that’s simply an incorrect assumption. To help you prepare for the gathering storm and prevent your portfolio from getting wiped out and threatening your financial freedom, here are some ways you can make money in a recession.
How can you profit in times of inflation and economic disruption?
Short it
By looking into different methods of trading and investing, you may realise that not all investments bank on the value rising.
If you’re involved in financial instruments like spread betting, you can earn money by predicting that the value of a security (such as an index, stock, share, or currency pair) will go down. So, in a time where things are generally moving down in price, you can still make a profit.
Sell up
No, we’re not saying sell your investments – the cardinal rule of investing is profit equals time in market, not timing the market, after all. Instead, if you are looking to make money at low or no cost or simply need an extra cash injection, you could finally look at selling some of the unused valuable items around your home.
Using sites like eBay, Gumtree and Vinted, you can quickly understand how much you can sell your unused clutter for and get them out there into the marketplace. All you need is some packaging and you’ll be good to go.
Property investing
Often in times of inflation, property investing is one of the few assets that will holding and increase in value. Just make sure to buy in up-and-coming areas that will still be attractive to investors and homeowners and consider doer-upper homes if you’re particularly handy with a toolbelt. You can also check out CMC Markets to get started with new investments.
Buy commodities
Since time immemorial, commodities such as gold and precious metals have been used in times of inflation to store wealth, given their scarcity, stable value, and universal recognition. If you have lots of money in stocks and shares, you could look to sell some of these assets and invest them in gold or other precious metals – just make sure that the ones you choose aren’t highly valued due to their industrial uses; likely to reduce if businesses go under and orders dry up in a recession-hit economy.
Buy bonds
Similar to commodities, government bonds are also a common safe haven in times of inflation and recession. There are lots of reasons why bonds make sense, but the main ones are that they are supported by governments (unlikely to fail) and released to raise money for governments (thereby reducing in number as countries tighten their belts to weather recessions).