Many of us live in fear of recessions, and understandably so. They cause mass job losses, business closures and stock market crashes. But they’re also inevitable and a natural occurrence in the economic circle of life, if you will. Though they may not like recessions, the smartest and wealthiest investors don’t sit around praying for a recession not to happen. Instead, they prepare and they have tried and true ways of not only surviving a recession, but thriving in one.
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GOBankingRates spoke with self-made millionaires to learn the steps they take to stay rich in a recession. We should all listen up. You don’t need to be making or investing millions of dollars to make these five moves.
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I Reduce Expenses Both Professionally and Personally
Stephen Halasnik, managing partner of Financing Solutions, owns a number of businesses and is no stranger to recessions, which he finds occur about every 10 years. He gets ahead of economic downturns by reducing expenses early.
“In business, I have in the past held off hiring or laid people off, eliminated expenses and reduced costs,” Halasnik said. “I try to give myself a longer runway so that my companies can endure the downturn. Personally, I have held off on an expensive family trip, talked to my wife about the need for us to cut back and made sure we had a line of credit in place, just in case things got really rough.”
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I Buy Undervalued Assets
Some self-made millionaires, like Ushmana Rai, a structural engineer and the founder of TDEE Calculator, see recessions as true tests of the structural integrity of wealth, where “patience becomes a financial superpower.”
“The biggest opportunity is buying assets when others are forced to sell,” Rai said. “I don’t mean panic-flipping houses or playing amateur VC. I mean acquiring undervalued real estate from over-leveraged investors, or buying equity in solid engineering or construction companies that need short-term capital. It’s a chance to step into ‘ownership mode’ — not just as a consumer of income but as a builder of value.”
I Keep a Big Cash Reserve
To maintain and build wealth during a recession, Robin Edwards, partner at Curetons Property Finders ensures he has a reserve of cash or easily accessible credit — not only for covering costs and avoiding any forced sales, but also for seizing opportunities should a prime buy pop up.
I Actively Diversify
“I also diversify actively,” Edwards said. “While property is my main business, I intentionally spread risk across other investments and sectors as well. This insulates me in case one area takes a heavier hit.”
I Seize Opportunities the General Market Hasn’t Caught Onto Yet
Rai is also adept at spotting infrastructure and development trends before the general market. “That insight lets me move early — like acquiring land before rezoning or investing in firms working on public projects funded by recession-response spending,” she said.
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This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: 5 Steps I Take To Stay Rich in a Recession
