Do you have an investment plan to offset the effects of the upcoming economic recession? Actually, the best time to build a strategy for protecting capital is a few months before the stock market and other financial sectors officially signal that the downturn has begun. Luckily, there are various ways to stave off the worst of the worst and get busy shielding your assets for what’s likely to happen in the second half of 2022.
Already, the year has set several records for being one of the worst in recent memory. Not only is inflation at a 40-year high, but unemployment and product shortages are making headlines in most developed nations as conditions worsen. What can individuals do to be proactive? In addition to investing in dividend stocks, savvy consumers are discovering the wisdom of buying rental real estate shares, trading forex, opening a self-directed IRA, getting involved in the wine market, staking cryptocurrencies for high-interest income, and flipping vehicles for a quick profit. Here are details about some of the most popular techniques people are opting for as 2022 worsens.
Stocks that regularly pay dividends are called aristocrats. The class represents the elite group of mostly blue-chip securities that have paid out steady dividends to shareholders for more than a quarter of a century without interruption. The aristocrats can be an ideal place to park money during an economic downturn. The trick for investors is to not take the payouts but set brokerage account preferences, so the dividends are automatically used to purchase additional shares of the same stocks.
While it may seem counterintuitive to start a business during a recession, when economies go sour, many asset classes perform quite well. Today, that’s especially true of several hard assets like wine, fine art, precious metals, and used cars. Used automobiles have been skyrocketing in value for the past few years. The rate of increase has been so substantial that individual resellers, called car flippers, can turn a nice profit by purchasing and upgrading older models and then selling them on the open market. Note that many cities will require you to obtain a dealer’s license to work as a flipper, but the cost and red tape are minimal compared to the potential earnings.
Real Estate Shares
Real estate has been a long-time favorite asset among those who prefer long-term stability and financial safety during recessionary times. That’s why investing in real estate shares is one of the most popular ways to take control of personal finances for working adults who value smart investing strategies. How does it work? The main attraction for many is related to the tax benefits associated with ownership of real estate assets.
Rental properties that produce income can significantly contribute to personal wealth. Those who want to lower their tax bills and earn a decent return on their investments at the same time seek out real estate assets. However, it’s imperative to understand what the tax benefits are and how to employ particular strategies to reduce your annual tax bills in the process. Start by reviewing a plain language guide that lists the most relevant tax benefits of investing in shares of income-producing real estate properties. You can easily view your options if you click here to see the guide.
Trading foreign currency is popular all over the world, primarily because entering the forex market is not costly, and anyone with a can-do attitude and basic skills can start buying and selling in a matter of hours after signing up for an online brokerage account. The unique aspect of forex is that volatility can work for, not against, the investor. Currencies are traded in pairs, so there’s always one winner and one loser. If you have the ability to pick the stronger one a majority of the time, it’s possible to earn from forex as a part-time or full-time endeavor. Be sure to use a demo account for a few days before going live with your own capital. Plus, spend time finding a broker who caters to new investors in the forex space.
Self-directed IRAs allow account owners to place real estate, precious metals, and many other non-cash assets into the portfolio. While there are strict rules about the kinds of real estate that can go into such an account, millions of people open SDRIAs in order to fund them with real estate, gold, silver, and cryptocurrency. It’s okay to own both a traditional IRA and a self-directed one at the same time, and many people do. However, investors are still under the total contribution limits that govern the amount they can put into an IRA. If you prefer a non-standard way of building retirement wealth and one that can withstand a recession, consider opening an SDIRA and funding it with precious metals, real estate, or cryptocurrency. Of course, there are no guarantees about profitability, but the upside is theoretically unlimited.
Investment-Grade Fine Wine
The wine market has finally moved into high gear as dozens of specialty brokers offer individual plans that allow anyone to purchase small or large amounts of investment-grade vino for long-term appreciation. Most wine brokers have account minimums of around $2,000, but first-time investors can take advantage of vintages that offer annual returns of 15 percent and upward. Of course, any wine can decrease in value at any time, but recent performance has been impressive.
Instead of using the old buy-and-hold technique with cryptocurrencies, consider staking. That’s when you purchase a particular crypto-coin and let it remain in the currency’s portfolio to earn interest. The process is similar to leaving money in a bank savings account and collecting annual interest. But, in the case of crypto staking, the rates are relatively high. Not all coins offer stake interest, but the ones that do can net you between 10 and 15 percent annual interest on your holdings. Note that the percentage is paid on the base value of the coin, which means that if prices fall, you won’t get as much return as expected. Likewise, if the coin’s value rises, you could earn a higher interest income.