ladies and gentlemen it's that time of the year when economists and financial analysts throw their hats on to decide what the financial landscape of the year will be and of course whether or not a recession will hold but in any case do you really want to be stuck waiting for these experts to tell you what to do remember when Warren Buffett said that's exactly the biggest mistake people make when investing well biggest mistake they make it's listening to a lot of other people and buying something because they think it's going to go up next week
or next month one of Warren Buffett's most iconic quotes of all time when it comes to investing is pessimism is the friend of the long-term investor Euphoria is the enemy man it's the perfect way to describe his investment philosophy remember the 2008 recession Amit the intense Market turbulence in October and November 2008 he not only invested in struggling companies like General Electric and Goldman Sachs but also shifted his portfolio away from commonly considered safe sectors like healthcare and consumer goods so he could focus more on financials and Industrial Cycles but of course 2024 is a
different ball game with its own rules should a recession happen an economic downturn will be the least of our problems there will be widespread job losses a decrease in available jobs and a significant decrease in earning power sounds scary right well it shouldn't be although recessions come with lots of problems they're also one of the best ways to build wealth ever heard of the saying that the rich make even more money during economic downturns check this out for a shocker who's winning in this economy right now the're Rich guys like me you know we have
gone from having 93 billion top 400 and guess what you don't need to be in the top 1% to come out ahead as a matter of fact if you play your cards right you may just be the latest inductee into an elite list by the time things get better so keep your eyes peeled and your notepads open because we're going to be talking about three foolproof ways to make money during any economic downturn that will give you loads of money fast using some of the investment techniques from Warren buet himself but wait there's more we're
also going to talk about the best ways to set yourself up to withstand any recession and some of the worst things to do when trying to beat downturns and spoiler alert it's going to be a mind-blowing reveal like no other that being said having already established the fact that recessions come with big potential to wreck havoc on your personal finances and jobs wouldn't you say that the first move you need to make ahead of a recession is actually not how to make money from it but rather how to prepare accordingly and on that note you've
got to make sure you have at least a 3-month emergency fund covering essential expenses like rent and groceries and if you've already achieved a three-month cushion strive for 4 months and then continue building from there this will ensure you have a buffer that can take you far bar without taking money out of your savings or investment Capital pay attention to this because we will be talking about why it's so important later in this video that said after creating a buffer in the form of your emergency funds the next step to take ahead of a recession
is chipping away at high interest debt if you can take your credit card balance down to 0 in the coming months you'll be in a much better spot if a recession hits and you happen to lose your job since you won't have an extra monthly debt payment to make moreover the sooner you rid yourself of costly debt the less interest you'll acrew on it so it's kind of like a win-win situation and finally to point number three which was actually called from the Oracle of Omaha himself you have to build on your current skills make
no mistake guys should an economic crisis come in 2024 companies will need to downsize their expenses to save costs and we best believe this measure will come in the form of massive layoffs so to prevent yourself from Landing on The Chopping Block you can either build on your skills to show more value to the company or increase your earning Power by having a side hustle that can get you a lot of money especially passively this will give you an extra income to build savings or pay down debt as well as a backup should your primary
job go away but speaking of extra incomes in this section we are going to be talking about three of the fastest ways to make money during any form of a recession starting with bonds a pretty Sleek way for an investor to make money through either holding until maturity or selling for a higher price when birkshire hathway released its third quarter earnings report everyone was shocked by one Sleek move you see at the time birkshire was a net seller of stocks they sold off stakes in hulet Packard and Chevron taking their cash and cash equivalent positions
to a new all-time record of $17.2 billion but yet Warren Buffett and his team added 29 billion to their position in short-term us treasury bills but why is this surprising Mr Buffett has long been against investing in long-term bonds he believes stocks and other equities outperform Bonds in the long run and that's a position he has held for decades so why is it that all of a sudden birkshire has increased its position in government bonds given the kind of man he is it's safe to say that he believes it'll pay him handsomely while waiting for
a new buying opportunity to come along making government bonds the only short-term investment that Warren Buffett likes during recessions investing in government bonds can be advantageous for investors seeking stability because when economic uncertainties rise investors often shift towards these safe bonds driving up demand and causing bond prices to increase in turn this inverse relationship between bond prices and yields ends up giving big returns for investors as they have the prime opportunity to sell these bonds at a premium and fast so if you want to adopt Mr Buffett's approach to minimizing risks maintaining liquidity and maximizing
potential returns while waiting for Golden opportunities to arise you are not going to get any better than bonds and this brings us to our second money-making method investing in stocks but hold on because we know what you're thinking yes recessions and downturns often lead to the fall of stocks yes the dip could last for a while but yes yes it's also one of the best times to make any investment skeptical we'll check out this wisdom quote from Warren Buffett guys Market downturns are inevitable for long-term investors so they shouldn't come as a surprise when they
occur since 1929 investors have witnessed 22 bare markets marked by declines of 20% or more from recent Highs but while the severity and recovery time of these downturns vary one of the easiest ways to get rich during a recession is to invest as much much money into the stock market as you can because when there's a recession the stock market's performance will unavoidably decline consumers spend less and companies earn less causing investors to worry and as these investors sell off part of their portfolios either out of fear or because they need money this leads to
a golden opportunity for those who have money to invest think of it like a discount if a stock drops by 25% it only means that it's now 25% cheaper to buy so even though it may seem risky investing when prices are low will end up giving you big returns when the market recovers as it always does but to address this let's recall the last three recessions prior to the covid-19 pandemic which are the Great Recession from 2007 to 2009 the recession in 2001 fueled by thec crash and the 911 attacks and the 19991 recession that
followed a long economic expansion of the 1980s in all all of these cases the long-term results were staggering no matter how imperfect the timing of investors was everyone who invests in the Market's lowest points during recessions ends up doing well although it's worth adding that timing the market is impossible there's no crystal ball that tells you when the market will hit its absolute bottom and thankfully you don't even need to even if you had invested in an S&P 500 Index Fund at the Market's Peak before the 2008 financial crisis you would have realized an 88.4%
annualized return over the subsequent 13 years and guess what the same applies to the 1990 91 recession if you put $110,000 into a typical S&P 500 Index Fund at the lowest point of the 1990 91 recession and reinvested dividends your investment would now be worth over $150,000 it's quite simple really when it comes to investing in stocks during a recession what you're doing is betting on the long-term success of us businesses and over long periods of time that's a pretty solid bet so rather than trying to time the market consider adopting a strategy known as
dollar cost averaging this involves investing equal amounts at regular intervals rather than making a lumpsum investment with this approach you can capitalize on falling prices by purchasing more shares and acquire fewer shares at higher prices when your favorite stocks start to get more expensive but nevertheless don't just jump into stocks because it's easy there are three things you should note before buying stocks number one always have enough money in your bank to cover three to six months of living expenses with the latter end of that range being ideal sound familiar having savings and emergency funds
at your disposal is crucial so if you don't have it build a solid emergency fund before buying stocks secondly avoid buying them if you can't afford to ignore your portfolio for a really long time guys investing during a recession isn't for the faint of heart you may think you're buying at a low price only to see your portfolio value decline a few days later so the best way to avoid losses in a recession and come out ahead is to plan on leaving your portfolio for an extended period of time and this brings us to the
third Criterion which states that you should shun any urge to obsessively check your portfolio when the economy is in bad shape and there's lots of stock market movement you may be more inclined to log on your brokerage account every day and see how your portfolio is doing but please if you're going to invest in stocks during a recession you simply can't do that the more you obsessively check on your Investments the more likely you are to panic and when you panic you risk making rash decisions that could result in a lot of losses so if
you fail to satisfy any of these criteria just buy bonds or skip to our third concept which is investing in precious metals like gold now it may not be as shiny of investment as bonds or stocks but hey there are a couple of reasons why many experts believe that buying gold just before a recession is the ultimate profit King for one similarly to how the safety of government bonds makes investors flock to them the value of gold tends to Hold Steady or often even increase during these down periods secondly gold is also a pretty good
way to diversify your portfolio and spread out your exposure across many asset classes think of it like an insurance policy policy while stock market Investments May decline the stability or growth of Gold's value can help offset or even counteract losses case in point according to Global wealth management firm Schroeders gold outperforms the S&P 500 by 37% during recessionary periods additionally gold is one of the best Hedges against inflation due to its historical role as a store of value in times of economic instability or when there's a risk of rising inflation investors usually turn to gold
as a way to preserve their wealth because unlike currencies which can lose value over time gold always finds a way to maintain its purchasing power making it an appealing Choice during recessions or periods of economic uncertainty when concerns about currency devaluation and Rising prices are prevalent but hey don't even get us started on the fact that gold is generally considered to be a liquid investment season after season and year after year gold will always be in demand because it is a scarce resource unlike a lot of assets like real estate gold can be sold almost
immediately after you need it making it a pretty handy asset if you need lots of cash to offset a layoff or if you're hit with any annoying unplanned expense
