What Investments To Make During A Recession

This video is about what investments to make during a recession.
A recession is characterized by two or more consecutive quarters of declining GDP.
Recessions are not solely caused by weak economic growth. They are frequently accompanied by widespread job losses, fewer available jobs, and increased government assistance (think stimulus payments and increased unemployment benefits).
With all of this in mind, you may wonder if investing is a good idea if we are currently in a recession or if one is imminent. Is it more prudent to keep every dollar you earn in cash?
Is investing during a recession safe?
During a recession, stock prices frequently decrease. In theory, this is bad news for an existing portfolio, but leaving investments alone prevents recession-related losses from being locked in through selling.
Moreover, lower stock prices provide an excellent opportunity to invest cheaply. Consequently, investing during a recession may be prudent under the following conditions:
You have a substantial amount of emergency savings.
You should always aim to have sufficient funds in the bank to cover three to six months' worth of living expenses, with the latter end of this range being more ideal. If you are present and have extra funds available, you are free to invest them. If not, you should establish an emergency fund immediately.
You plan to avoid touching your portfolio for at least seven years.
During a recession, investing is not for the faint of heart. You may believe you are purchasing at a discount, only to see the value of your portfolio decline a few days later. Taking a long-term approach to investing is the most effective way to avoid losses in a recession and emerge ahead. Plan to reserve your funds for at least seven years.
You will not constantly review your portfolio.
When the economy is in poor shape and the stock market is volatile, you may be more inclined to log into your brokerage account every day to check the performance of your portfolio. However, if you intend to invest during a recession, you cannot do so. The more frequently you monitor your investments, the more likely you are to experience panic. And when you panic, you run the risk of making rash decisions that lock in losses, such as selling underperforming stocks.
Investing during a recession can be a good idea, but only if you are in a strong enough financial position and if you have the right mindset and strategy. Never sacrifice your immediate financial security for long-term gain. Remember that if you are financially struggling, there is no shame in passing up opportunities. Focus instead on paying your bills and maintaining your physical and mental health.
You can always increase your investments at a later point in your life, once your job is more secure, your income is more stable, and your overall state of mind is more at ease.
Actual outcomes of investing during recessions
In the long run, long-term investors who invested during a recession have done quite well. Looking at data from three recent recessions — the Great Recession of 2007-2009, the 2001 recession fueled by the dot-com crash and the 9-11 attacks, and the 1990-91 recession that followed a long economic expansion in the 1980s — you may be surprised by the long-term results, even if investors' timing wasn't perfect.
Investing at the market's lowest point during a recession will likely result in long-term success. However, investors should recognise that trying to time the market is almost always futile. There is no crystal ball that can predict the bottom of the market. In other words, you will not invest at the absolute optimal time.

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DISCLAIMER
I am not a financial adviser. All my videos are for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific economic situation.

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