For the past year or so, the fear of a global recession has sparked fears and apprehension in the markets.
But here’s the good news: the economy and job market outlook have been upgraded by forecasters.
They now predict a recession to start later in 2023 than previously expected. However, 58% of economists still think there’s a greater than 50% chance of a downturn within the next 12 months.
This percentage is about the same as it was in December.
With those projections in sight, here are some tips on how to prepare for a recession:
- Build up your savings. This is the most important thing you can do to prepare for a recession. Make sure you have enough money saved up to cover at least 3-6 months of living expenses.
- Pay down debt. The less debt you have, the better off you will be in a recession. So focus on paying down your high-interest debt first, such as credit card debt.
- Invest in yourself. This is a great time to invest in yourself by taking courses, learning new skills, or networking with other professionals. This will make you more marketable in the event that you lose your job.
- Review your budget. Ensure your budget is realistic and you are spending only what you earn.
- Create a rainy day fund. This is a separate savings account that you can use for unexpected expenses, such as a job loss or medical emergency.
- Be prepared to cut back on expenses. If you lose your job or your income is reduced, you may need to cut back on your expenses. This could mean eating out less, canceling subscriptions, or moving to a smaller place.
- Stay positive. It’s important to stay positive during a recession. Remember that this is a temporary situation and that things will eventually improve.
On top of those basic strategies, many investors are searching for new ways to prepare for a potential recession.
How To Invest Before And During A Recession
One option that has gained popularity in recent years is investing in cryptocurrencies. Here’s a list of steps to take if you want to prepare for a recession with crypto:
Do Your Research
Before investing in any cryptocurrency, it is essential to do your research.
Take the time to understand the technology behind the currency, its use cases, and its growth potential. Research the team behind the project and ensure they have a solid track record.
Look at the market trends and see how the currency has performed in the past.
Diversify Your Portfolio
It’s essential to diversify your portfolio when investing in cryptocurrencies. However, put only some of your eggs in one basket. Invest in different cryptocurrencies, and allocate your funds according to your risk tolerance.
Consider investing in stablecoins and cryptocurrencies pegged to a stable asset like the US dollar. This can reduce your exposure to the volatility of other cryptocurrencies.
Another option is through NFTs.
NFTs are a new digital thing that’s getting super popular. But what if you could use your NFTs to get a loan instead of selling them?
Every time you sell an NFT, you must pay taxes. This means you have to keep track of every sale.
With an NFT lending platform, you can get cash for your NFT without selling it off, which utilizes NFT APIs to secure ownership and transactions.
So, this option allows for if you’ve got a really valuable NFT and you want to keep it, you can get a loan based on how much it’s worth.
Choose a Secure Wallet
A cryptocurrency wallet is a digital wallet that stores your cryptocurrencies. It’s essential to choose a secure wallet to protect your investments.
Look for a wallet that has strong encryption and two-factor authentication.
Consider a hardware wallet, which is a physical device that stores your cryptocurrencies offline.
Keep an Eye on Market Trends
The cryptocurrency market is highly volatile, and prices can fluctuate rapidly. Therefore, keep an eye on market trends and be prepared to adjust your portfolio accordingly.
Follow news and developments in the industry, and be aware of any regulatory changes that could affect your investments.
Consider Dollar-Cost Averaging
Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money at regular intervals, regardless of the market conditions.
This can help reduce the impact of market volatility on your investments. For example, consider setting up an automatic investment plan that invests a fixed amount of money each month into cryptocurrencies.
Investing in cryptocurrencies can be a way to prepare for a recession. Still, it’s essential to do your research, diversify your portfolio, choose a secure wallet, keep an eye on market trends, and consider dollar-cost averaging.
As with any investment, risk is involved, so consult a financial advisor before making investment decisions.
With the global recession looming, taking some proactive measures now will help you work through some of the challenges that may occur. And for investors looking to come out on the other side of a recession, crypto may provide a unique opportunity to build wealth through a downturn.
