Whether you realize it or not recession can be a great time to build your wealth. The general rule of building your wealth is...
Start buying when everyone is selling and start selling when everyone is buying.
When everyone is selling, there is less demand and more supply, therefore, the price is down. You can buy when the market is down. When everyone is buying, there is less supply but more demand, therefore, the market is up, and you can sell to make profits.
What exactly happens during the recession?
Just by looking at the market, you can see what’s happening.
The stock market is down
The housing market has lost its market value
The Crypto market has lost trillions of dollars.
What should you do now?
Start buying stocks and flex your muscles in buying crypto assets. If you have a lot of money, you can also invest in real estate as the housing prices have gone down. Diversify your portfolio.
Bitcoin has gone down to $20K. Ethereum is around $1000. Nasdaq Stock Exchange has dropped by 32 percent compared to January. Dow Jones is down by 19 percent this year. Experts say housing marketing in the US is not going to crash but the price will fall. When the price drops, it will have a strong repercussion in the market. Recession is anon.
However, if you see the brighter side of life, you can use the recession to build your wealth.
The last time Bitcoin was 20K, was in December 2020. Bitcoin has once again dipped to $20K, you can start buying Bitcoins.
The last time Ethereum was $1000, was in January 2021. Now that the price has dropped to the lowest level in 17 months, you can buy Ethereum.
Not just cryptocurrencies, you can also start buying stocks.
If lack of funds is your main issue, increase your income by increasing your income-generating activities.
Set buy limit orders for stock and crypto market based on your risk tolerance level
The rise and the fall of the stock market are recurring phenomena. If you have been watching the stock market for a while or have been investing in various markets, you will notice that all investment gurus tell you to buy during the dip.
When you start buying during the dip, you will find that every time you buy during the dip, it keeps dipping. This is very frustrating
The worst part is you run out of money and you can no longer buy during the dip.
Wouldn’t it be nice when you know exactly when the dip will stop dipping and you could stop wasting money by buying at the lowest low?
Well, there is a way to do this, you can buy during the lowest dip. This is called a buy limit order. You can set your buy order to the lowest psychological level and forget about everything. When the market goes bullish, you start making money.
The Crypto market has completely crashed, stock market indexes have gone down by double figures, and housing market price has also gone down. The markets are crashing or let us say the markets have crashed.
When the market crashes, there are always lessons to be learned
Never invest in leverage unless you are a hedge fund or have access to a lot of cash funds. Leverage refers to a technique where you borrow in order to invest with the hope that the profits will be much higher in the future. A hedge fund is an investment pool where the managers trade and invest in liquid assets for maximum returns such as short selling, leverage, and derivatives.
Never purchase at the market price. Always set a buy order limit at the level that matches your risk tolerance level. When the market is going down set your minimum buy order.
Always invest on the basis of at least a 5-year plan and cut yourself from all day-to-day market noise.