Play episode
Hosted by

Today on “The Impatient Investor” Andrew talks about the recession of 2007 and how to make money during a recession. He relates 2007 to today’s events and how we can prepare for a downfall. Enjoy!

“Be fearful when others are greedy and greedy when others are fearful”

Warren Buffett


When the recession hit in 2007, a multitude of disastrous consequences followed. People had to sell their homes, watch their wealth disappear. And many Americans lost their jobs. There’s no doubt that economic downturns are tragedies, but for some investors, they’re not all bad.

The reason is these people know how to make money in dire conditions. And when the economy rises again, they end up with significant gains. The backbone of these strategies can be summed up in the following quote, “be fearful when others are greedy and greedy when others are fearful,” that quote is from Warren buffet. And what he means is that when the public is fearless and aggressive with their investments, you should be wary. Alternatively, when the public is afraid and keeping their money out of the market, there are tremendous deals to be had. Those are the deals that you must capitalize on. Let’s talk about current economic conditions.

Right now, we are experiencing one of the most extended bull markets in history. Every asset is seeing capital gains. Residential real estate is at an all-time high. Spending is at an all-time high and investors coming out on the other side of COVID-19 are no longer afraid to invest. You never know precisely when the economy is going to see a downturn, but conditions like these are clues that a correction is coming, that correction could be manageable, or it could be another recession that sends the entire economy into a downward spiral. What exactly will happen? And when are impossible to predict, but it is worth understanding what to do with your money in the event of a recession. So let’s talk about where to invest during a recession.

If a recession hits and you already have your general strategy in place, you’re going to find great deals and invest with confidence. What that philosophy does not tell you is where to put your money. Unfortunately, you can follow the right principles, but still see your investments fail if you don’t have a sound strategy. In recession conditions, one asset beats the rest in its ability to make you rich. That asset is real estate. Let me explain why.

First let’s look at rental income. If you buy stocks in a recession, you might have to wait years for their value to rise again. That means almost zero cash flow while you hold that asset and no significant profit until you sell many years later. Alternatively, if you invest in a private real estate fund that specializes in rental

properties, that is not the case. In fact, you will start to see income right away, no matter how severe recession is, people always need a place to live. They might sell their home and get an apartment or downsize their existing rental situation. But very few of them will drop out of the market entirely. Meaning that no matter how bad things get, you will have cash flow through the recession.

Another critical risk that comes with investing in stocks is the potential that they go to zero. You might think you’re getting a great deal on a company in recession conditions, buy a significant amount of stock and then watch that company go bankrupt. If this happens, your money will disappear. When you choose real estate, you protect yourself from this risk. Real estate prices may fall significantly, but they never bought them out and hit zero. Instead, they always have some amount of value which will rise as the economy improves. Sometimes significant inflation accompanies a recession. Additionally, even when the economy is good, inflation eats away at many assets. Real estate is the only asset that is not a victim of inflation.

The reason for this is both the value of the property and the rent charged rise at the rate of inflation. The result is that while cash, stocks and bonds will lose value during inflationary conditions, your real estate investment will retain its value entirely, making this extremely valuable in the worst economic conditions, which feature stagnant growth and inflation all at the same time. The primary appeal of stock market investing during a recession is typically the potential for capital gains, which describes the value of an asset rising. This effect is not make stock more tantalizing than real estate though, because real estate sees significant capital gains too. This means that not only will your holdings create rental income, but also their value will rise just like the stock market.

Nobody wants recessions to happen. They lead to tragedy and heartbreak around the country. And often the whole world. That being said, the cyclical nature of the economy means that recessions are inevitable. When they come, you’ll want to know how to invest your money effectively. And if you do, you can take those poor conditions and use them to get rich. To do so, you should invest the majority of your money in real estate. Not only does it provide rental income to give you cash flow through the recession and beyond, but it also never goes to zero providing inflation protection and seeing significant capital gains.

Now that you know how effective real estate investments are, you are fully equipped to get rich off of the next recession. If you want to learn more about how I teach investors to create multiple streams of income, just go to www.stoptradinghours.com.

Join the discussion

  • Thank you for your entire labor on this web site. My mom really loves managing investigations and it is obvious why. My partner and i learn all regarding the lively tactic you present sensible things through your web site and in addition invigorate response from some others on the situation then our favorite princess is really starting to learn a whole lot. Take advantage of the rest of the year. You have been doing a stunning job.

  • I am commenting to let you know of the fantastic encounter my cousin’s daughter experienced reading your site. She even learned many issues, not to mention what it’s like to have a wonderful giving mindset to have many people just grasp chosen grueling subject areas. You really exceeded our expectations. Many thanks for distributing the informative, healthy, educational and as well as easy thoughts on the topic to Jane.

  • Needed to send you the very little word to finally thank you so much the moment again regarding the spectacular techniques you have shared above. It’s extremely generous of people like you in giving easily all a few people could have advertised as an e-book in order to make some bucks for their own end, certainly considering that you could have done it if you considered necessary. The concepts additionally acted as the easy way to be certain that many people have a similar dream just as mine to find out a little more concerning this condition. Certainly there are a lot more enjoyable instances ahead for folks who discover your blog.

  • I enjoy you because of all your efforts on this site. Ellie enjoys doing internet research and it’s easy to see why. All of us hear all concerning the compelling means you deliver good information by means of the blog and as well cause contribution from other people about this concept plus my daughter is actually being taught a lot. Enjoy the remaining portion of the new year. You’re the one carrying out a glorious job.

  • I am also commenting to let you know of the helpful encounter my friend’s daughter found reading through your web page. She figured out numerous issues, not to mention what it’s like to have an amazing giving mood to have most people really easily know selected impossible subject areas. You really exceeded our own expectations. Many thanks for imparting the invaluable, safe, explanatory and even easy thoughts on the topic to Janet.

  • I am glad for writing to make you know what a magnificent encounter my friend’s girl gained studying your web site. She learned plenty of pieces, which include what it’s like to possess an awesome helping nature to let other folks very easily know just exactly several multifaceted subject matter. You truly exceeded people’s expectations. Thank you for presenting these powerful, safe, explanatory and in addition fun tips about this topic to Julie.

  • Thanks for your whole work on this website. My niece takes pleasure in working on research and it is simple to grasp why. We all notice all relating to the powerful ways you render worthwhile tricks via your website and therefore welcome response from website visitors on this topic while our own simple princess is without question understanding so much. Take pleasure in the rest of the year. Your performing a wonderful job.

  • I happen to be writing to make you understand what a wonderful experience our princess went through visiting yuor web blog. She realized too many things, with the inclusion of what it is like to possess an incredible teaching style to make the rest without problems understand various very confusing topics. You undoubtedly surpassed visitors’ expected results. Thanks for supplying those warm and helpful, trustworthy, revealing not to mention unique tips on your topic to Tanya.

  • My husband and i ended up being very satisfied when Peter managed to round up his survey while using the precious recommendations he received when using the weblog. It is now and again perplexing to simply possibly be releasing tips which usually the others might have been trying to sell. We really take into account we now have you to thank for this. These illustrations you made, the straightforward website navigation, the relationships your site make it possible to promote – it is mostly terrific, and it is making our son in addition to us recognize that this theme is satisfying, which is certainly very vital. Thanks for the whole thing!

  • My spouse and i got quite joyful that John managed to do his reports through the entire precious recommendations he grabbed out of your web pages. It is now and again perplexing to just continually be giving out procedures which people may have been selling. So we grasp we have got the writer to give thanks to for that. The main illustrations you have made, the simple web site navigation, the relationships you will help foster – it’s got many incredible, and it’s really helping our son in addition to the family know that the matter is exciting, which is quite mandatory. Thank you for everything!

  • My spouse and i got really joyful that Jordan managed to do his reports through the entire precious recommendations he had through the web pages. It is now and again perplexing to just find yourself handing out secrets which people may have been selling. So we keep in mind we have got the writer to give thanks to for that. The most important illustrations you have made, the simple web site navigation, the relationships you will help to foster – it’s got many overwhelming, and it’s really leading our son in addition to the family know that the situation is exciting, which is rather mandatory. Thank you for everything!

  • Thanks for the useful information on credit repair on your web-site. The thing I would offer as advice to people will be to give up a mentality they will buy at this moment and pay back later. As being a society most people tend to repeat this for many factors. This includes family vacations, furniture, plus items we really want to have. However, you must separate a person’s wants from the needs. When you’re working to fix your credit score you really have to make some trade-offs. For example you possibly can shop online to economize or you can click on second hand suppliers instead of highly-priced department stores to get clothing.

  • Google

    Very couple of internet websites that occur to be comprehensive below, from our point of view are undoubtedly properly really worth checking out.

More from this show

Let’s get social

Follow Andrew to learn more about his investments and to share the podcasts with friends!

Episode 18