One person said:
“Surely this is an opportunity for people to also make money and look out for opportunities or even become millionaires.”
Today, we're going to go into detail and share practical ideas for how you can profit from a recession.
The following 5 ideas that we're going to share will offer different things for different people.
So whatever suits you best we would suggest you investigate and look in more detail in your own time.
It's important to make the point that we are very much aware of the challenges and struggles that people are facing with the current cost of living crisis.
But we're also aware that there are a lot of people who may have been very diligent with their money.
Whether it be with small amounts of money that they're getting in or a lot of money.
Those people want to think of other ways that they can use this opportunity to make their money grow.
Or even to make their money work for them instead of them working for their money.
We hope this post will also be useful for you even if you just want to be enlightened about what the opportunities are during a recession.
Because believe it or not, it's not all doom and gloom.
A lot of millionaires are made during the time of a recession.
How To Profit From a Recession
Here are 5 ways to profit from a recession:
1: Buy Cheap Stocks and Shares
The first idea is to invest in cheap stocks and shares.
I'm sure everywhere you look online, you're hearing news about the value of stocks and shares falling.
Major stock markets at the time of writing have fallen by more than 20%.
Instead of going into panic mode or worrying about the stocks and shares you might already have…
Why not look at it as an opportunity. You could see this as stocks and shares on sale!
What do you do when things are on sale?
If it's something that you value and something you wanted to purchase anyway, you would go and buy it.
So that's the perfect way to look at this situation.
However, we won't recommend buying individual stocks unless you're buying dividend-paying blue-chip stocks.
If you're not buying the above, then we'd suggest making sure your investments are diversified.
Stick with investing in index funds and ETFs and keep them cheap and globally diversified where possible.
This ensures that you're not just relying on the success of one company, but on the success of many companies for you to get a return.
Don't think short term. This approach is for a long term view.
What we don't want you to do is invest and then you're constantly looking at the performance of your stocks and shares.
That won't be any good for your mental health. Think long-term and you should be okay.
Recommended: Super Simple Investing (Gain investing confidence in only 12 days)
2: Repurpose Commercial Property Into Residential
This next opportunity is pretty unique.
It is to repurpose commercial property into a residential property.
Now, you might not be aware of this, but there's something called “Permitted development rules”.
In August 2021, the rules were changed to allow commercial properties to be converted into residential properties.
These are properties that are under permitted development rules.
Previously, you could buy a commercial property that was either a restaurant or a GP surgery, etc, for commercial purposes.
However, you had to stick to the type of use that that particular commercial property had.
e.g. D1 Use property (e.g. a church, GP surgery, nursery, etc) was meant or D1 Use only.
But now the rules have been relaxed to allow the conversion of commercial property to residential.
If you look at the screenshot above, it tells us exactly what's going on.
Essentially, what this means is that there's an opportunity in the time of a recession, for somebody out there who's interested in investing in property.
To explore an area perhaps in London or in other parts of the country.
You might find suitable commercial property that you convert into a residential property for either owning, living, or renting out as a business by itself.
Now, you're probably wondering, why bother with all the hassle?
Why would you even bother going to get a commercial property and try to convert it into a residential property?
Residential property has a much higher price per square foot compared to commercial property, which is usually a lot cheaper per square foot for the same location.
That is because historically, commercial properties have been mainly for commercial purposes only, and not meant for residential living.
The rules state that there are areas where the permitted development rules don't apply.
We're just sharing the tips here for you to go away, dig a bit deeper, and do a bit more research.
Google those keywords we've mentioned and explore if this is something that you might want to do yourself.
The masterclass was delivered by Nemi Woghiren, a property developer and member of Financial Joy Academy.
If you're already a member, simply log in and check it out for free.
The information in that masterclass will completely blow you away.
So much practical information from someone who has actually done it and is sharing their knowledge for us to apply.
3: Buy Some Crypto (maximum of 5%)
This one is only for those who are open to high-risk investments and have spare cash.
You should only consider this after prioritising stock market investments for goals such as retirement.
In fact, most people should avoid cryptocurrencies as it's unregulated and high risk!
If you do want to experiment with this, we'd suggest you consider investing in trusted cryptocurrencies like Ethereum or Bitcoin for the long term.
Crypto has fallen a lot recently and has caused so much panic and distress for people.
Last I checked, Bitcoin was trading at $19,665, after a high of $68,000 in November 2021.
This fall has depleted the wealth of a lot of people who put most of their eggs in one basket.
There have even been talks about people wanting to commit suicide.
If you're going to do this, we suggest sticking to only the trusted big cryptos and only allocating a maximum of 5% of your portfolio to cryptocurrencies.
We suggest a 5% max because crypto is a highly volatile asset class.
Unlike stocks and shares, the value of crypto has fallen drastically in comparison to stocks and shares.
Your capital is at risk and you could potentially lose all of your money.
So only invest in cryptocurrency, what you are prepared to lose.
We're not saying you will lose your money, but there is a possibility of that happening so be prepared.
But for some people who want to have a bit of exposure to a volatile asset that they believe in for the long term, now is the best time.
If you want to invest, try coinbase, a platform, we use ourselves to explore this area of cryptocurrencies.
They have something called Coinbase Earn, which offers a way for you to learn about cryptocurrencies whilst earning some cryptocurrency.
4: Buy Online Brands With Hidden Value
We currently run the online brands, The Humble Penny and Financial Joy Academy.
We're also aware of many other online brands, that exist and are up and coming.
They have many followers on social media platforms and places like that.
But believe it or not, a lot of that is just vanity.
A lot of those people don't make any money whatsoever.
The reason for that is that they do not know how to make money from their online brands.
They've simply learned how to attract attention but not how to monetise it.
What that means is that during a time of a recession, what happens is that those people will get tired of posting, sharing and not making any money.
A friend messaged us today. They're doing well on Instagram, but they are not seeing it translate into money.
So there are many of these brands that look interesting.
They've got a good brand presence and stuff like that.
But truth be told, they represent better opportunities for somebody else in the time of a recession.
So if you're that person, you have business acumen, you're good at entrepreneurship, and you've had experience with businesses before…
Then, online businesses with potential should be where you need to focus your money.
They're highly scalable and offer over 50% net margins in most cases once monetised.
Perhaps you might want to approach these brands that are doing well online but don't have that business back end.
Acquire those small brands by paying them some money, a few £000 will be acceptable.
Before you know it, you own such a company and brand completely.
You can then build upon it from the back end to start to monetise it and generate an income because it already has an audience.
We have friends who are doing this right now.
They've acquired many online brands, literally behind the scenes, and you wouldn't even know they've acquired them.
So if you're someone who is looking for an opportunity like this, a side hustle, or an online business, this may be your way to profit from a recession.
Recommended: How to Start an Online Business in 7 Days
5: Buy Equity In Small Businesses With Potential
When a recession happens, there will be a lot of businesses that will start to struggle.
They will need money to run their operations.
However, some of those businesses are quite solid businesses.
They might be brick-and-mortar-based businesses like laundrettes or restaurants that have established customer customers in a particular niche.
Or online businesses that have a lot of demand, or they might have a particularly well-established brand.
However, they might be needing resources by way of funding coming into the business.
e.g. to put towards marketing or other areas of their business to keep that business afloat or to keep that business growing during the time of a recession.
There'll be a lot of opportunities for someone out there who has money to acquire a bit of equity in a business like that.
During a recession, a lot of traditional places where you might be able to get funding ordinarily might not be ready to offer any money.
So that presents an opportunity for ordinary people who are observing smaller businesses from the outside, to get in early.
Getting to know the owners of a particular small business is a good way of getting involved.
Over time, after building a good relationship, you can then enquire about investing money for a small equity stake.
All going well, you can then make an offer that works.
I've had people approach us to invest in our business, The Humble Penny.
The people who have done this best are the people who have taken the above approach of building a relationship first.
So definitely be on the lookout for those sorts of opportunities during the recession and focus on building relationships first.
A time of recession is a difficult time for many people and businesses financially.
However, it also presents opportunities for some people and could even become the event that makes you a millionaire one day.
The key is not to be greedy during these times.
Take measured risk, think long term, and don't forget the important need to look after yourself, and your mental health, and look out for others in need around you.
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Where do you see the opportunities during these times to profit from a recession? Share with us in the comments
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.