How to Grow Your Wealth During a Recession

1 5
Avatar for Miika
Written by
1 year ago

Strategies That Can Help You Build Personal Finance When Inflation is High

When the inflation is high, you still need to pay your rent/mortgages, you still need to buy food and other essentials, and you still need to pay taxes. Sadly, when there is inflation, the value of your money substantially goes down, in order to maintain your lifestyle you have two options:

Allot more money on your expenditure budget

Cut your expenses and maintain your life with the same expenditure budget

Inflation does not increase your income in fact, you might even experience a pay cut (because the companies are not making as much as they were making previously). So, allotting more money into your expenditure budget is not a good strategy. You will have to cut expenses.

During inflation, you also need to look for ways to make more money. How can you do that? Well, learning a new skill might help you.

During inflation, you will have to completely cut your luxury budget, you will have to wait to buy a new phone, and you will have to wait to go on a vacation.

Buying the Dip: The Investing Strategy That Works

Investing is not only the method to generate an income stream for you but it is also a strategy to grow your wealth. When you invest, you can earn dividends or a return on the investment that you can use to maintain your lifestyle. This is the basic motive behind investing. However, when you invest and when sell your asset, you will build your fortune. This is the best investing strategy. However, if you have never invested, how can you start investing?

The answer is simple, buy the dip!

What does it mean to buy the dip?

Buying in the dip means buying when the market falls. When the market falls the price of stocks will go down, when you buy stocks when the market is down, you can benefit from the stock investment when the market starts gaining value. The same strategy can be also applied to other markets such as real estate, crypto, etc.

How long does the market take to return?

There is no fixed stipulated time but if you look at the historical data you will see normally it takes 12-15 months for the market to correct itself.

If you have the patience to wait and if you are financially sound, you will profit by buying the dip.

Can't Take Investing Risk: Here's How You Can Build Wealth

Save in High Yield Saving Accounts or Buy Bonds

If you do not have any knowledge of investing, start with a fixed deposit bank account. In our country, you can get a 12 percent average interest rate on fixed deposit accounts. When you are renewing your deposit term, you can add the money you received as interest on the principle and continue with fixed deposit savings. This is a risk-free way to build an income.

In case you don't trust banks, try buying government bonds. In our country, we get a 12 percent interest rate on government bonds. Mutual fund investment is also a relatively less risky investment method for newbies.

Learn the difference between assets and liabilities

If you buy liabilities, it will cost you dearly. If you bought a car, it is a liability, you will spend money on car maintenance, fuel, insurance, tax, etc. You could have traveled to your workplace by public transport for $100 per month and now your expenses will grow by 10 times. Buying a house for yourself is also a liability, you could have easily lived in a rented apartment for $3000 a month but now you will be paying twice that amount for a mortgage. You need to distinguish between liabilities and assets. You also need to focus on investment instead of saving.

One of the major problems with most people is they get a loan to buy liabilities, a lot of people buy a car through a loan. A car is not an asset, it s a liability. If you put loan money in liability, you will make a loss on two fronts, one you pay your car loan along with interest, and two, you spend money to maintain your car (pay for gas, maintenance, insurance, tax, etc.). A car is a luxury item and you should never buy a luxury item through a loan, you should only buy a car when you have enough savings. If you are buying a car, make sure it is electric, so that you can save money on fuel.

Invest in Yourself

When it comes to investing, a lot of people only think about assets (stocks, crypto, real estate, etc.), they don't think about investing in "oneself." Investment should always begin by investing in yourself. Investing in yourself means you spend money to build your knowledge, skills, and expertise. If you have these things, you can always generate income for yourself. When you are investing in yourself, you need to invest in the right course and the right subject. That's because you need to learn something that is profitable, something that is financially rewarding in the future. You also need to save as much as you can.

3
$ 0.04
$ 0.02 from @foryoubtc09
$ 0.02 from @Unity
Sponsors of Miika
empty
empty
Avatar for Miika
Written by
1 year ago

Comments

Liability becomes asset when it is fully paid.

$ 0.00
1 year ago