It is the best time to think about how to make money during a recession. Let us get prepared to face the recession, while others worry. Here we discuss five methods to survive the inevitable downturn due to the Corona Virus.
The COVID-19 pandemic is already triggering the worst economic recession in this century. And, it is causing severe damages to the jobs and income streams of the people all around the world. Last week, Oxfam (a UK based charity organization) predicted that half of the world’s population of 7.8 billion people could be living in poverty by the time the pandemic is over. And now the recent indications of a second wave of the virus may worsen the situation.
Since this situation is so unpredictable, it is useless to worry about when it will turn around. So, rather than wasting time, here are five ways to manage, save, and make money during the recession.
How to make money during a recession
Here is how to survive the scarcity of money during the upcoming recession.
- Start saving
- Cash-out under-performing assets
- Escape from sinking ships
- Reduce taxable assets
- Work on starting an online business
Saving money to face the COVID recession
The first step is to build a fund for you and your family’s basic needs. And, you want it to be accessible and unaffected by the market conditions. So, start a savings account or fill up your existing savings account as an emergency fund. It might not give you attractive returns, or any return at all. But, the goal is to fight and survive the recession by having cash in hand.
If you don’t have enough cash, perhaps getting a low-interest loan might be the quickest option. Most of the financial institutions are now offering government-backed special low-interest loans to recover the cash flow after the lockdowns.
If you have a strong cash income, it is better to keep some of that money ready to seize opportunities as well. For example, some people and businesses will start selling assets during the downturn, and if you have liquid cash available, you can buy these assets low and sell high after the recession. So, it is one of the best ways to make money during a recession.
Cash-out under-performing assets
If you have real-estate, vehicle, businesses, or any kind of assets that their value might get hit hard during the recession, it is better to sell them in advance. So, you can use that money to pay-off high-interest loans. And, this will improve your credit score and enable you to seek low-interest loans to build a cash fund for emergency and capitalization as we have discussed in the previous step.
Escape from sinking ships before the recession hits
Re-evaluate your exit strategies from your investment plans to stop losses during the recession. You don’t set sails to a rough sea. Similarly, keeping your cash out from the market might be the best way to survive a highly volatile market.
So, carefully study the effect of COVID recession on your investment plans, and set the right exit points if the market goes against you. Successfully saving your money from a falling market is another way of saying that you are making money during a recession.
Reduce taxable assets
Do not pay unnecessary taxes to the government during hard times. Cutting down all your excessive spendings is a must to survive the recession. So, restructure your assets in a way that can lower your taxes. For example, you can deposit your long term savings in your kid’s accounts to stop it from being taxed. Also, you can sell underperforming assets, as discussed in the second topic and save them from being taxed.
Work on starting an online business to make money during the recession
Do you know that the USA has gained nearly 30 new billionaires during COVID-19 lockdown? Almost all of them are digital business owners. During the COVID-19, digital businesses have gained an enormous boom in market value, and it will keep increasing for the years to come. So, it might be a good idea to start working on your online business while the window is still open.
Starting to sell online is not something hard or costly. If you already have a brick and motor store, you can slowly turn that business into an online business without any hassles. And, if another lockdown is imposed, you can continue your business online.
If you have a new online business idea, start creating your business right now. The window is already closing, and you have a limited time to build your income stream before the recession. However, when you do so, make sure to invest only a disposable amount of money from your savings. Otherwise, if something goes wrong, you will end-up without any cash to survive the recession.
Making money during a recession
There is a very limited time to prepare for the COVID recession, as it has already begun. So, stop worrying about the predictions and start working on saving, managing, and making money during the recession. So, you can keep your family safe and beat the economic downturn with peace of mind.
And, one important thing to keep in mind is, if the recession hit hard, keep your ego aside and be ready to hustle. You might be doing a white-collar job with a good income. But your company can lay you off the next day. So, it is better to be prepared and start working on the methods to make money during the recession.
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