How To Make Money During A Recession

How to make money during a recession bar graph

While a recession can be a challenging time for many individuals and businesses, there are still opportunities to make money during a recession. Read on to learn how.

Here’s How To Make Money During A Recession

  1. Defensive Stocks: These are stocks that tend to perform well during economic downturns because they provide essential goods and services that people need regardless of the state of the economy, such as healthcare, utilities, and consumer staples. Consider investing in defensive stocks to protect your portfolio during a recession.
  2. Government Bonds: When the economy is struggling, investors often flock to government bonds as a safe haven. These bonds are backed by the government and provide a steady stream of income in the form of interest payments.
  3. Real Estate: While a recession can lead to lower property values and higher vacancy rates, it can also present opportunities for real estate investors to buy properties at a discount. Consider investing in income-generating real estate, such as rental properties, to generate steady income during a recession.
  4. Online Businesses: With more people working remotely and shopping online, there may be opportunities to start or invest in online businesses that cater to these needs. Consider investing in online retailers, delivery services, or remote work tools and services.
  5. Freelancing or Consulting: During a recession, companies may be more inclined to hire freelancers or consultants on a project basis rather than full-time employees. Consider offering your skills as a freelancer or consultant to generate income during a recession.

Defensive Stocks

The following are a few ways you can make money with defensive stocks

  • Invest in defensive stock mutual funds or exchange-traded funds (ETFs): These funds invest in a diversified portfolio of defensive stocks, providing you with exposure to a range of defensive stocks without having to pick individual stocks. This can help reduce your risk and increase your chances of making money in the long run.
  • Look for high-quality, dividend-paying defensive stocks: Defensive stocks that pay dividends can provide you with a steady stream of income even during a recession. Look for companies that have a history of paying dividends and have a strong financial position.
  • Consider buying defensive stocks when they are undervalued: During a recession, the prices of defensive stocks may drop, presenting an opportunity to buy them at a discount. Look for stocks that are trading at a lower price-to-earnings ratio than their historical average or the broader market.
  • Stay diversified: While defensive stocks may provide some protection during a recession, it’s important to have a diversified portfolio to manage risk. Consider investing in a mix of defensive stocks, growth stocks, bonds, and other investments to create a well-rounded portfolio.

Treasury bonds brochure

Government Bonds

Government bonds can provide a way to earn a steady stream of income for investors.

Here are some ways to make money with government bonds:

  • You can purchase government bonds and hold them until maturity, which can range from a few months to several years. During this time, you will receive interest payments, and when the bond reaches maturity, you will receive the principal back. If you purchase the bond at a discount, you will earn a profit when you receive the principal at maturity.
  • You can buy and sell government bonds on the secondary market. The price of a bond can fluctuate based on changes in interest rates and other market conditions. If you buy a bond when its price is low and sell it when the price is high, you can earn a profit.
  • You can also invest in bond mutual funds or exchange-traded funds (ETFs) that hold government bonds. These funds provide diversification and professional management, which can reduce risk and increase returns.
  • You can use bond options to trade the bond market, with a combination of calls and puts options. Calls allow you to buy a bond at a set price, while puts allow you to sell a bond at a set price.

Make Money In A Recession With Real Estate

A recession can present unique opportunities for real estate investors. The following are some ways to make money during a recession with real estate.

  • In a recession, property values may decline, creating opportunities to purchase real estate at a lower cost. Look for distressed properties or properties that have been on the market for a long time and negotiate a lower purchase price.
  • During a recession, many people may choose to rent rather than buy, as it can be more affordable. If you have a rental property, ensure that it is in good condition and priced competitively to attract tenants.
  • In a recession, some people may be forced to sell their homes quickly due to financial hardship. This can create opportunities for real estate investors to purchase properties at a discount and then renovate and sell them for a profit.
  • Real estate investment trusts (REITs) are investment funds that own and manage a portfolio of real estate properties. During a recession, REITs may be undervalued, making them an attractive investment opportunity. Distressed debt refers to loans that are in default or at risk of default. Investing in distressed debt can provide opportunities to acquire real estate assets at a discount.

Real estate investment infographic

Start Or Invest In An Online Business

Recessions can present opportunities for online businesses as people spend more time online and look for ways to save money. The following are some ways to make money in a recession investing in online businesses.

  • E-commerce: Online shopping has become increasingly popular in recent years and has seen a surge during the pandemic. Investing in e-commerce businesses, such as online marketplaces or online retailers, can provide opportunities for growth during a recession.
  • Online education: As people look to improve their skills and increase their employability during a recession, online education can be an attractive option. Investing in online education platforms or companies can provide opportunities for growth.
  • Remote work: With more people working from home during a recession, remote work platforms and tools are in high demand. Investing in online platforms that facilitate remote work, such as collaboration tools or video conferencing software, can provide opportunities for growth.
  • Subscription-based services: Subscription-based services, such as streaming services or meal kit delivery services, can be attractive during a recession as people look for affordable and convenient ways to access goods and services. Investing in subscription-based businesses can provide opportunities for growth.
  • Online advertising: As traditional advertising budgets are reduced during a recession, online advertising can become increasingly important. Investing in online advertising platforms or companies can provide opportunities for growth.

How To Make Money During A Recession Freelancing Or Consulting

During a recession, freelancing or consulting can provide opportunities to make money as businesses may look to cut costs by hiring independent contractors rather than full-time employees. The following are real ways to make money from home for free during a recession freelancing or consulting.

  • Offer your expertise: As businesses look to reduce costs, they may need to rely on outside expertise to solve problems or fill gaps in their operations. If you have specialized knowledge or skills, such as in marketing or finance, consider offering your services as a consultant.
  • Provide cost-effective solutions: During a recession, businesses may be looking for cost-effective solutions to their problems. Consider offering services that can help businesses save money, such as virtual bookkeeping or social media management.
  • Expand your services: During a recession, businesses may need to adapt to changing market conditions. Consider expanding your services to meet these needs, such as by offering e-commerce consulting or virtual event planning.
  • Network and market yourself: During a recession, competition for freelance and consulting work may be higher. Consider networking with potential clients and marketing yourself through social media or online platforms to stand out.
  • Build long-term relationships: During a recession, businesses may be looking for long-term solutions to their problems. By building long-term relationships with clients, you can provide ongoing value and ensure a steady stream of work.

pens and color charts on a desk with a computer monitor that says "FREELANCE".

Top 10 Places To Provide Freelancing Services

There are many great places to provide freelancing services online, including:

  1. Upwork: Upwork is one of the largest freelance marketplaces, connecting businesses with skilled professionals in a variety of fields.
  2. Freelancer: Freelancer is a global marketplace that connects businesses with freelancers in a variety of fields, including design, writing, programming, and more.
  3. Fiverr: Fiverr is a platform where freelancers can offer their services in a variety of categories, from graphic design to writing, video editing, and more.
  4. Toptal: Toptal is a freelance platform that specializes in connecting businesses with top talent in software development, design, finance, and more.
  5. Guru: Guru is a freelance marketplace where businesses can find talented professionals in fields like design, writing, programming, and more.
  6. PeoplePerHour: PeoplePerHour is a freelance marketplace that connects businesses with skilled freelancers in fields like design, programming, marketing, and more.
  7. 99designs: 99designs is a platform that connects businesses with freelance designers for graphic design projects, including logos, websites, and more.
  8. Task Rabbit: Task Rabbit is a platform that connects individuals with freelancers for a variety of tasks, including home cleaning, furniture assembly, and more.
  9. SimplyHired: SimplyHired is a job search engine that lists freelance opportunities from a variety of sources, including job boards and company websites.
  10. LinkedIn ProFinder: LinkedIn ProFinder is a platform that connects businesses with freelancers in a variety of fields, including design, writing, and consulting.

In Conclusion

A recession is a period of economic decline characterized by a reduction in economic activity, increased unemployment, and lower consumer spending. While recessions can be difficult for individuals and businesses, there are some potential benefits that can arise from a recession. Such as the lower cost of goods, investment opportunities at lower prices, reduced inflation and opportunities to learn new skills or retrain for a different career or business path.

MisterShaka

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