Money In The Mattress: Recession Proofing Your Finances
If the financial crash of 2007-2008 taught us anything, it’s that your money is never as safe as you’d like it to be. The global financial crisis spurred international panic unlike anything seen since the Great depression of the 1930s. Of course, this didn’t come out of nowhere. It was the result of years of neoliberalism and deregulation of the financial services industry and reckless speculation and lending by banks that were considered ‘too big to fail’. In the wake of this crisis, 10 years on, people are more mistrustful than ever of financial institutions. While jury’s still out on whether the status quo is set to change in any meaningful way, many who want to safeguard their assets against the whims and caprices of the markets are keen to find safer repositories for their capital. Fortunately, in the digital age, investors are presented with far better options than stuffing their money into mattresses. While no investment is a safe bet, there are reasonable steps to take to ensure that your financial security won’t be compromised by institutions that collapse under the weight of their own greed.
Investing in recession proof industries
Property is a relatively stable investment but it is still subject to the whims of the financial markets. A diverse stock portfolio will often trump property, especially if it’s in industries that can not only weather an economic recession but thrive in it. These include:
Sin / comfort industries- In times of economic hardship, people still rely on ‘sin’ industries and creature comforts, the nature and expense of said comforts just tend to be dialled down. While families may be less likely to buy new TVs, stereos and cars, they will likely spend more on the simple pleasures like wine, beer, chocolate and fast foods.
Repairs and renovations service industry- In tough times people tend to make do and mend rather than splurge on replacements. Investing in companies that repair, upgrade and renovate is a great way to ensure that your portfolio doesn’t take a hit in an economic downturn.
Discount Retailers- The likes of Walmart tend to do well in most circumstances but they actually suffer in times of economic prosperity. When families are watching the purse strings, however, they’re extra attractive to the thrifty investor.
Bitcoin
Bitcoin is a completely digital currency (often referred to as cryptocurrency). Unlike the dollar or euro ir has no intrinsic value on its own, but its value is determined by mathematical algorithms rather than the values of precious metals that dictate the value of traditional currencies. Bitcoin appeals to many ‘bank shy’ investors as its current yield is at an all time high and as a completely decentralized currency it is completely disconnected to the fluctuations that affect banks, making it virtually recession proof. Many investors are investing funds from their IRA and / or 401k in Bitcoin in the hopes of a dramatically high yield. You can predict your ROI using a Bitcoin calculator. Bitcoin also has (at least for the moment) certain tax advantages. As it is not a recognized currency it is treated as property rather than currency, making it a grey area that is favorable to the taxation of most savings and investments.
There are no guarantees in the financial world, but these investments are relatively stable ways to keep the whims of markets at bay and take your financial security into your own hands.
