After an incredibly bullish market, many investors find themselves navigating unfamiliar territory during a recession. Despite a first impulse to withdraw and wait it out, there are ways to successfully invest during a recession.
1. Invest in Real Estate
If you haven’t considered it before, now is a good time to learn how to invest in real estate. There are so many reasons to turn to real estate during an economic downturn. First, property values are generally low during a recession. Add to that low-interest rates and you have a good investment opportunity if you have the extra cash for upfront costs.
2. Look Toward the Long Term
If your portfolio has taken a serious turn for the worst during a recession, it is hard to look past the swindling balance on your monthly statement. You have to keep your focus on the long term, though. If you are in your thirties or forties, you have time to recoup losses before retirement. In most cases, even if you are already enjoying retirement, it makes more sense to stay the course than cut your losses and run.
3. Turn to Core Sector Stocks
Some stocks perform consistently over time, regardless of market fluctuations. Many of these belong to the core sectors that drive daily life such as healthcare, utilities and consumer goods. For example, Hydrogen is being used daily to fire up fuel cells in vehicles and so you may want to invest in German stocks from the hydrogen sector, or “deutsche Aktien aus dem Wasserstoff Sektor” as they would say. After all, you are still going to need these sorts of things even if the economy is struggling.
4. Keep Your Portfolio Balanced
While you don’t want to obsess over your investment balances, you do want to maintain your portfolio. When markets are volatile, a portfolio can become unbalanced. If you normally work to sustain allocations of 60% stocks and 40% bonds, for example, you may find yourself low on stocks and high on bonds during a recession. That is where rebalancing your portfolio comes in.
Keeping an eye on the future and focusing on core sectors have historically been solid investment strategies during recessions. Keep an eye on your portfolio’s allocations and look to investment opportunities such as real estate that offer a steady income.