Investment is not a fair weather friend to your finances, but it can be an aspect of your financial portfolio no matter what the market holds. The only difference is where a smart investor puts their money in a bear market, or a down economy, as opposed to the choices of investment during a bull economy.
When the economy is down, it is time to think about long-term investments, since the investor can now buy up funds, stocks, and more at an impressively low price. In fact, a down economy is the opportunity to build and diversify your portfolio at a discounted rate.
Most importantly during these times, be sure to only invest funds you can afford to lose, in case of disaster. These methodologies describe how to make extra money, not create a new proprietary income. The higher diversity you manage during a bear economy, the lower your risk, and below you can find a list of ten diverse options to invest your money.
This investment is not for those looking for how to make money fast, but investors who are looking for a payout in ten or more years might feel their ears perking up at this opportunity. Dollar-cost averaging, or DCA, can be utilized no matter what the share price may be, and these prices will decrease when the economy is down.
DCA works as a fixed sum is invested incrementally over a decided time interval. Using that fixed sum, the investor purchases as many shares as possible during each decided interval. The number of shares acquired depends upon the share price at the time of purchase. Over a decade of time or longer, the cost of these shares will average down, which means your entry price is a better financial choice than most who buy at other times of the market.
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Money Market Investments
Money market opportunities are known for being low reward, but they also carry a lower risk for your investment funds as well. When you invest in options such as certificates of deposit (CD) or U.S. Treasury Bills, your money transfers into short term investments with high liquidity so you can more easily access the funds in necessary.
Build a Survey Website
One especially clever investment for a bear economy is to put your money into a long-term, high-yield investment such as building up your own survey website. Popular and highly successful examples of these sites include Swagbucks and MySurvey, but the list of successful survey websites goes on.
These sites make money no matter what the market, as people who are extremely low on funds tend to visit survey websites when they need a few extra dollars in their pocket, ensuring you gain income when needed. Another perk to building a survey website, is that it’s great for those looking for how to make money from home. Of the many ways to make money online, survey sites attract a wide audience with an endless supply of opportunity.
The smartest businessmen, including figureheads such as Warren Buffett, understand the ebb and flow of the stock market on an intimate level. That’s they aren’t afraid to put their money into value stocks when the economy is down, because they understand that when poor companies decrease in value, so do many better companies who will eventually swing back upwards.
In short, in a down economy you can get high-value stock investments at a minimal price, if you know which stocks in which to put your money.
Otherwise known as non-cyclical stocks, defensive stocks are like securities and tend to perform especially well in a bear market. These stocks come from industries that will be used and valued even at times of financial crisis, including replaceable household items such as shampoo or toothpaste.
This is as opposed to cyclical stocks, which are often luxury goods or items consumers purchase when expendable money, which tend to fare poorly in a down economy. This year is a good opportunity to purchase defensive stocks as they may be the security you need to balance out the higher-risk stocks in your portfolio.
A physical asset like gold is another kind of safe-haven where your money can remain protected during hard times, in a way similar to government bonds. Gold, which a held commodity of inherent value, lowers risk of investment and low returns in a negative economy.
It should be noted that gold prices are highly susceptible to fluctuation, and the changes in value can result in a large variety of factors, including market sentiment.
No matter what the state of the market may be, cold hard cash holds minimal changes in value during unstable market times, no matter what other funds or stocks are experiencing. For this reason, many investors will keep an emergency store of cash in the event of a sudden and unanticipated down market.
Another strategy when considering an upcoming bear market is thinking intelligently on how to lose the least money, which can be just as effective in the long term in earning and maximizing profits and earning money in a bull market.
Putting money into equities, especially industries such as utilities, REITs, health care, and even consumer needs, can diminish how much money is lost on the initial downswing, especially when compared to other funds. In these equities, keep in mind that a larger cap may offer better returns, but they are also higher risk investments.
Diversity Your Portfolio
No matter what you choose to invest in, the best bet in a down market is to put as much diversity as you can into your investments. This includes adding variety in industries and types of investments where your money goes, and your portfolio should always include more than just bonds and stocks in today’s economy.
If you are a wealthier investor with more funds to consider, hedge funds might be one of your top choices to invest in during a market downfall, as these funds are specifically designed to continue making money, no matter what the state of the market may be.
One important note when considering a hedge fund for your investment: keep only a small portion of your total financial means in these holdings.
If you are looking to put your money somewhere designed specifically for low markets, consider foul weather funds, which are designed to do well in a bad market, but they do not tend to succeed in bull markets.
Investment Opportunities in Every Market
Just because the market is on the downswing doesn’t mean investments should come to a standstill. With a little forethought and clever thinking, an investor can find great places to put their money in any market.
By combining a diverse portfolio with smart investments, there is a wide range of options for any investor during a bear market to keep growing their money.