It seems like every day you hear people
talking about the upcoming recession
well it is uncertain when exactly the
next recession will happen there is no
doubt that one is coming therefore in
this video I will share with you exactly
how you should invest to protect
yourself from a recession and if you're
new to the channel then hit the
subscribe button below for more
life-changing content before we get into
the exact investment strategy that will
have you in a better financial position
than 99% of others when the recession
finally happens let's first go over some
things you can do outside of investing
to ensure you are prepared for hard
times in the economy similar to stock
investing where you are maximizing your
gains limiting your risk the best thing
you can do to prepare for an economic
downturn is to reduce the financial
risks that are present in your life so
how do we do that in my opinion there
are three tenets of financial risk
mitigation that must be in place before
you can face the recession with the
first being a reduction in your debt in
the United States debt is a serious
issue credit card debt alone totals more
than one trillion dollars and when you
add in student and mortgage debt to that
number
it only multiplies in fact the average
credit card debt per US household as of
June 2019 was eight thousand three
hundred and ninety eight dollars which
means that getting debt under control is
something most Americans should be doing
now the reasons why you will want to
have reduced debt during times of
economic turmoil are plentiful first if
you have dead and lose your draw because
of the recession then paying debt or
interest payments will be that much
harder and will only further increase
your debt load moreover having debt
hanging over your head will add to the
financial stress you will bear as you
start to see your investments decline
that is unless you use the investment
strategy I will share later on in this
video the second way you can protect
yourself heading into a recession is to
make sure you are covered with the right
insurance things like your house car and
your life should definitely be insured
heading into a recession as during these
hard times you may find yourself without
the funds to replace them if an accident
were to happen some recommended coverage
levels include the full replacement cost
of your house and 75% of the content
within it $500,000 worth of car
insurance for liability and bodily
injury and ten times your annual salary
in
life insurance hovering proper coverage
will give you the peace of mind that if
something happens you won't be on the
hook for the replacement cost of these
assets or that your family will be taken
care of finally before heading into a
recession you must have an emergency
fund set up well this type of financial
backup should be in place whether or not
a recession is looming it's imperative
that you have ample funds put away when
times are tough sadly most Americans
have failed in the emergency funds
department in fact roughly 40% of
Americans couldn't come up with $400
cash that they needed to respond to an
unexpected emergency in their life now
you're probably asking yourself how much
money should I be putting away in this
emergency fund general advice is to have
three six months of living expenses put
aside but in my experience having a
year's worth of money ready to access
neaby will give you the confidence that
you could ride out just about any
financial challenge you face don't
forget that this emergency fund must
include all living expenses like rent
and car payments groceries and utilities
now that you've set up a solid financial
base we can now move into how to invest
during a recession when preparing your
recession-proof investment strategy
there are certain considerations to take
into account the first is your
investment horizon or how long you
expect to keep your money in the market
if you're young then more likely than
not your portfolio will be able to
recover from any losses that may
experience during the lowest points to
the recession for these types of
investors there really isn't any need to
change your current investment strategy
unless you have your money in companies
that may be put out of business if the
economy crashes unfortunately not
everyone can be this lotsa days achill
in the recession investment strategy in
fact the majority of investors need to
change their approach when tough times
are ahead for instance there are many
people that just cannot handle the
emotions of seeing their investments
drop by 30 or 40 percent other investors
may be retiring in the next few years
and are relying on their current
portfolio value to sustain them through
their later years in short each investor
has different needs but surviving an
economic recession can be achieved by
anyone by investing in the right types
of funds so what funds should you be
investing in the following five types of
investments will be sure to help fight
the market decline best during times of
recession
fun number one health care stocks
whether the economy is booming or
busting people's health will always be a
top priority which is why holding stocks
incredible health care funds is
recommended as part of your recession
investment plan think about it like this
someone who needs to take blood pressure
medication isn't going to stop taking a
pill that keeps them alive just because
their stock dipped 20% which means that
putting your money in companies that
offer these products is a safe bet to
add to this fact many people have
medical coverage through their work
meaning that buying these medical
products and supplies isn't even coming
out of their pockets so spending on
drugs and supplies is unlikely to be
discontinued a good example of just how
solid health care companies can be in
times of economic turmoil is Johnson &
Johnson during the 2008 recession
companies were seeing all-time lows in
their valuations with many of them
dropping more than 50 percent in value
but this medical device company due to
its positioning in the healthcare field
experienced only a 7% drop in share
price and kept paying out dividends even
in these hard financial times
therefore healthcare stocks should be
part of your recession proofing strategy
fund number 2 utility stocks similar to
health care products whether the economy
is doing well or not people need to keep
the lights on in their homes
this means that companies supplying this
core service will continue to earn
steady income and experience less of a
hit from the market decline in fact when
asked to choose between losing their
electricity and missing a medical bill
payment most people felt that giving up
their power was a much dire consequence
making utility stocks probably a safer
investment than health care funds
another reason to hold utility stocks
during a recession is that many of the
best utility stocks pay dividends for
instance Duke Energy Corp is an annual
dividend of 4 percent and its dividend
yields continues to grow year-over-year
dividend yielding stocks are important
to have during a recession because the
income they can provide will offset any
declines in price that they experience
and can supplement your cash position if
money becomes tight fund number 3 high
dividend stocks let's face it not every
stock is going to experience significant
price increases over time and they
certainly won't during a recession which
is why a lot of the value of a stock
clients and its
dividend yield if you're unfamiliar with
what a dividend is it is commonly
defined as a sum of money paid regularly
by a company to a chair holders out of
its profits in short it's a company
rewarding you for being a shareholder
and receiving dividends is important
during a recession it can be easy to get
discouraged with your investment
portfolio when your fund values decline
but seeing a consistent dividend coming
in on a quarterly or annual basis helps
ease the pain again as I previously
mentioned utility stocks as well as real
estate investment trusts are great
options when looking to recession-proof
your investment strategy just be careful
when looking into high dividend yielding
companies oftentimes companies will try
and lure in investments because they
offer a larger than normal dividend
yields but their financial position is
less than stellar making them a prime
target for financial turmoil especially
when the markets begin to decline fund
number four investment properties moving
away from the stock market rental
properties make for excellent
investments during a recession now as we
saw in 2008 and other recessionary
periods house values are not amenable to
price drops but with that being said a
lot of aspects of this type of
investment make it almost totally
recession proof first people will always
need a place to live so whether the
markets are soaring or bottoming out if
you're a landlord then chances are high
that you will still have a tenant
willing to pay you rent
every single month even during the
recession and these rent payments are
another fantastic element of owning
rental property for instance if your
salary plateaus or you lose your job you
will still have a secondary stream of
income to help pay the bills while you
try and get back on your feet finally
owning rental properties is beneficial
beyond just recessionary periods based
on historical studies worldwide Houston
returns from the year 1870 to 2015 were
six point nine percent after inflation
meaning that this form of investment
will continue to make you money year
after year fun number five government
bonds another strong investment option
for tough economic times are government
bonds while the market may struggle the
government is never going to collapse
nor will it default on its debt meeting
that your investment is in a very safe
position US Treasury bonds are the most
popular form of government bond and this
is due to a few reasons
first the United States economy is very
durable meaning that it will always
bounce back from the financial
challenges it faces
moreover historically in times recession
global capital tends to find its way
into companies and government related
investment vehicles making the US dollar
rise in value and in turn local
investments another benefit is stocking
up on bonds in preparation for a
recession is how interest rates react to
times of low financial performance
typically in a recession interest rates
decline as the government tries to spark
the economy by allowing people to borrow
at cheaper rates as interest rates drop
so do bond yields and this causes the
value your bonds to go up so while
everyone is watching their portfolios
crush you'll be sitting pretty with your
wise investment in government bonds now
the previous five types of funds are
great ways to recession-proof your
investments and investing in them we'll
have you ahead of 99% of the population
when the recession takes place but there
was one other option to consider which
is to get out of the market completely
when a recession is looming many people
feel most comfortable by selling off
their investments in holding a portfolio
value in cash for the uneducated
investor this would seem like a way to
avoid any form a portfolio to climb but
the seasoned investor knows that this
isn't the case you see holding your
money in a savings account or other low
yielding accounts means that you are
making no money but beyond making no
money you were absolutely losing money
due to inflation as of June 2019
inflation in the United States was 1.7
percent this means that if you had
$100,000 sitting in your bank after a
year your buying power with this money
would now be 98 thousand three hundred
dollars well it sucks to be losing money
this way how investors should see it is
that they are controlling their loss
rather than risking losing tens of
percentage points instead when the
market slides into a depressed state
therefore by reducing the financial
risks in your life assessing your risk
tolerance for a recession investing and
putting your money into the funds I have
previously mentioned you will be ready
to face any economic challenges that are
coming your way thanks for watching if
you want to go from the life you have to
the life you deserve then hit the
subscribe button below
you
