There is investing in which you want to grow your wealth, and there is investing when you want to protect it. And during a global pandemic with the threat of a global recession looming, this is a good time to think about protection over profit.
Though many people do make a fortune during uncertain financial times by making alternative investments, this is best left up to the pros so you can focus on not losing money until things subside.
Chaos is not conducive to having control over your money so you have to be careful about how you decide to protect it. Besides just places to park your money, you should be doing things to make sure that you are financially secure while the money is coming in, as well.
In this article, I will go over several things you should be doing when a recession hits.
1 – Park your money
There are several ways that you can put your money aside to keep from losing it. The safest way is to just put it in a bank. Though you won’t be generating any interest as many banks these days are not paying any. Your money is insured by the FDIC up to $250,000 so if you have under that, then even if the bank goes under you won’t lose your money.
An alternative is to try to make some money by buying some commodities like gold or even cryptocurrency. Though it is often considered very volatile, if you are careful then putting your money into Bitcoin isn’t a bad idea. It is easier than you think if you have never dealt with Bitcoin before as you only need a free bitcoin wallet to get started.
Gold is very popular with people that look to hedge against any market losses so they usually keep some tied up there. During times like these it is very common for people to sell stocks and buy gold to wait things out.
2 – Live frugally
This is a good time to start really saving money while you have it coming in. This is the way to go for two reasons. One is that you may lose your job at some point and have less money coming in. If you cut down on your spending then you can live on less if the time comes.
The other reason is simply to have more money saved. If you have an emergency fund of a few months, then that is not likely to last you as long as you need. A crisis this big could take a while. Living frugally and socking money away while you do so will help you build that fund much more quickly.
3 – Keep your goals
If you were already trying to save money for an event like retirement or to buy your dream home, then keep doing that. You may find that you are still on track with all things considered. Especially if house prices fall after a recession begins. If not, then you have a lot of money saved that can see you through some tough times.