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- An Informative blog by Akshata Shrivastava & Atharva Joshi
I made X dollars worth of investments today, a sizable portion of which I was able to deduct from my living expenses. In a little over a quarter of a year, I receive a 20% return. That's something I eagerly anticipate. But to say that Mumbai is the cleanest city in India is the same as saying the aforementioned details.
The fact that there are few indications of a slowdown in inflation is a major factor in the perception of an impending recession. According to the consumer price index (CPI) report from last week, inflation over the previous year hit its highest level of 9 percentage points.
No investment is "recession-proof," but certain stocks, funds, and strategies may help your portfolio fare better during a downturn in the economy. If indeed a period of recession is upon us, here are few alternative investment tactics:
METALS LIKE GOLD AND SILVER
Experts have analysed that precious metals like gold and silver are a good option to invest your money into during times of recession due to their ability to hold value. An analysis of several years shows that the prices of bullion are steady even in times of turmoil. A recession means that you might have to purchase these metals at an inflated price however they are valuable & low-risk options.
STOCKS THAT OFFER DIVIDENDS
It has been noted that the stocks that pay dividends are fairly stable and have a solid record. Companies are well aware of the downturn they may face if they fail to provide dividends which can lead to a large number of investors selling their shares. The ability of these companies to grow steadily and remain substantially steadfast against recession unlike most of the others makes them a good bet.
INDEX FUNDS
News of recession leads to panic which results in market-wide sell-off & index tanking. In a recession having cash at hand is the number one priority which means that additional investors sell their equity to increase the amount of cash at hand. These low prices will not persist for long. In the long term, these index funds would provide elevated returns.
STOCKS OF CORE INDUSTRIES
If you're looking for a recession-proof investment, there are a few industries to look out for. These industries should be involved with the necessities of people like healthcare, consumer goods etc. In a recession, households typically have to reduce their expenditure. Having said that, some expenses simply cannot be avoided. After all, you'll still need to make payments for necessities like food, power, and healthcare.
Regardless if the market is bullish or bearish, the past performance suggests that those expenses should take precedence in any budget. As a result, equities in the consumer staples category that cater to those essentials are likely to stay in good shape.
REAL ESTATE
This is a choice that requires the availability of substantial capital, if money isn’t an issue this is a viable option to invest in during the recession. The fall in demand means that the prices also plummet providing an excellent opportunity to buy real estate at a lower price than what it deserves. Times of recession can incur financial burden on some individuals which forces them to sell their property to sustain their family hence there is market-wide selling of real estate at a discounted price. However one has to be careful not to jeopardize his financial position while investing in real estate during the recession.
PEER-TO-PEER LENDING
Peer-to-Peer lending is a relatively new phenomenon. Online P2P services offer loans for businesses, personal use, or anything else. There is no bank involved. Your money is pooled with other investors’ money and together you make a loan to the individual asking for funds. You'll receive a fixed repayment each month that includes the interest you're owed.
OWNING YOUR OWN BUSINESS
You can use your money to invest in your own business. Some businesses have very low startup and ongoing costs. Virtual or online businesses like teaching, consulting, coaching, and IT support can produce a steady income and grow over time. Part-time business can be a good alternative to a regular job.
EQUITY CROWDFUNDING
Startup companies that need money can offer shares of their companies on equity crowdfunding websites. These sites include AngelList, CircleUp, SeedInvest, Wefunder, and more. If you invest in a company over an equity crowdfunding site, you own part of it and will be rewarded if the company succeeds.
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