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This week on Money and Investing, Mitch Olarenshaw and I discuss how to prepare financially for a recession. Many people have never experienced one before, but small steps taken today can make a big difference in the future.
1. See recessions as opportunities
Recessions can present opportunities to invest in assets at discounted prices. Whether it’s real estate, shares, or other investments, being prepared with cash reserves allows you to capitalise when the market dips.
2. Invest in recession-proof assets
Some industries perform better during economic downturns. Defensive shares like consumer staples, healthcare, and utilities tend to be more stable. Bonds and commodities, such as gold, can also provide security.
3. Build an emergency fund
Having a financial safety net is essential. Aim to set aside at least three months’ worth of expenses to cover unexpected costs. This buffer can help prevent financial strain during tough times.
4. Avoid panic selling
Market downturns often lead to fear-driven selling, which locks in losses. Instead of reacting emotionally, consider strategies like dollar-cost averaging to take advantage of lower prices and long-term growth.
5. Increase your income with a side hustle
A second income stream can provide stability during uncertain times. Whether it’s freelancing, investing, or starting a small business, having multiple sources of income can help you stay ahead.
A recession may be challenging, but taking the right steps today can help you manage financial uncertainty with confidence.
For more info about Money and Investing you can go to the podcast; read The Wealth Playbook: Your Ultimate Guide to Financial Security and The Wealth Playbook on Audible.
Disclaimer: Wealth Magnet Pty Ltd (ABN 52 618 868 830) trading as Australian Investment Education is a Corporate Authorised Representative (CAR no. 1255231) of Grange Financial Services Pty Ltd (AFSL No. 488609).
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
