Best investment strategy before the onset of recession

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precondo ca OlSGcrLSYkw unsplash

Would you like to invest in the stock market but are worried about an on-coming recession? 

The Great Recession occurred in 2008, and is one of the most important factors that shapes the global economy today.

 This means that with just a few years of recessions under our belt,

 it has become quite easy for Americans to become more cynical about investing their money into stocks.

 However, with many large companies currently sitting on mountains of cash and dividends, 

there is no shortage of equilibrium investments available today.

The best investment strategy before the onset of recession is to focus on stocks that pay consistent dividends, such as Verizon, American Electric Power, and Microsoft. 

These stocks have provided investors with a steady stream of income.

 While dividends fluctuate with the ups and downs in the stock market,

 they will grow in value over time and provide a much more conservative portfolio than other investments.

The worst investment strategy would be to focus on hot stocks:

 companies that seem to be making money hand-over-fist, such as Nike (NKE), Amazon (AMZN), and Facebook (FB)

These stocks are very risky because they are more likely to be hit with a loss, 

due to investors becoming overly confident in their prospects.

There is also the option of focusing on self-storage facilities. 

Self-storage facilities provide an alternative to living space for people who own too much stuff or can’t afford larger properties.

 The increased demand for storage units during the Great Recession, as well as the increasing population leads prognosticators 

to believe that there will be an increased demand for self-storage space in the future. 

This means that self-storage facilities are a great investment strategy.

The best investment strategy for this market is to be diversified.

 Contribute to your 401k, Roth IRA, or 529 Plan with an allocation of 50%. 

Then, with the remaining 50%, invest in a variety of assets that are not correlated with each other.

 This will allow you to maximize your return by spreading out your money into different sectors.

Here are some sector options that are not correlated with each other:

The worst investment strategy is to buy only one asset class (or even worse, one stock).

 By investing in only one sector or company, you are putting all of your eggs in one basket. 

This means they could all be wiped out if something negative happens in that sector or company.

 For example, if you invest in only Microsoft, you run the risk of over-investing in the dot-com stocks. 

Furthermore, if you buy stock in only one class of assets (for example, stocks),

 you are at risk of suffering losses if something goes wrong with the economy. 

Since 2008, the economy has been improving steadily.

 But recessions do happen on a regular basis.

The best investment strategy for people over 50 is to diversify across different asset classes including bonds, stocks, and real estate. 

This will provide higher potential returns while minimizing risk.

“what to buy before a recession?”

The Great Recession was when financial institutions began to collapse.

 “Some of the largest were Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, AIG and Washington Mutual.”

 They all failed due to poor decisions made in buying risky assets in an effort

 to increase their profits or in mortgage loans that became unaffordable.

“A financial institution is a business that engages in the lending and investment of money and other financial assets.” 

These institutions were looking for safer investments to make more profit, instead of seeing what was going on right in front of them.

 “They all made poor decisions that led to their bankruptcy.”

During the recession, the government used money from different accounts to keep banks from collapsing.

 “In 2008, they spent almost $800 billion on bailouts for banks nationwide.”

Mortgage loans became a major factor during the Great Recession. 

“We know about an enormous increase in subprime loans during 2007 and 2008, which ultimately led to failure of many financial institutions

 Subprime loans are risky because they extend credit to people with bad credit. “

“Fannie Mae and Freddie Mac

, for example, bought loans from financial institutions who suffered from poor lending practices 

were unable to meet the high demands of their customers.

 When Fannie Mae and Freddie Mac failed, many homeowners had difficulty finding a mortgage lender who would give them a loan they could afford.” 

“In a mortgage, a person takes out a loan for the purchase of real estate. 

At the time of this transaction,

 he or she agrees to pay back the bank or lender in installments over a period ranging from one year to 30 years.”

 The only way these mortgages can default is when they fail to pay back by their due date.


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