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How often have you said, “I can’t wait for the market to crash so I can finally afford to buy a house?”

Probably tons. I know I did.

But, what is a recession? And what does that mean for the rest of the economy?

We’ve all HEARD of the dot-com bubble in the 2000s and the crash in ‘08. But, we were kids. Have we really gone through a recession? What does that look like?

Recession Basics

According to Investopedia, a recession is a significant, widespread, and prolonged downturn in economic activity. (https://www.investopedia.com/terms/r/recession.asp)

Okay, so?

Well, this can affect a lot of things. Many people may lose their jobs. Loss of employment = loss of income = loss of homes.

Inflation is also heading to an all-time high. Our dollar is worth a lot less for the same things we have already been buying.

How to prepare for a recession?

Social media hasn't really pointed out ways to prepare for a recession. And every "financial expert" says - just invest in an index fund. You can use Robinhood and that's it!

What??

I supposed that's one way to do it... But it isn't the way I would suggest it to my clients. A recession is a great opportunity to build great wealth. Overnight? Of course not. But, with discipline and planning, you will be well on your way.

Ways to Invest

In short, you have 3 ways to save.

Fixed - this is your bank account at an interest rate of 0.02%. You never lose anything, but you barely make a profit. So, against inflation, you're probably losing money.

Variable - this is reflected directly in the market. So, you can have some high gains, but you can also lose everything. In a recession, you definitely want to avoid this to keep your money in your pocket.

The third option,

Indexed (my FAV!) - with this option, you never lose due to a market floor. So, if the market crashes, you don't lose any money. But, if the market does well, your money gains! There usually is a cap here, which some may see as a downside, but never losing is a win to me during a recession.

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