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With soaring prices for services and goods and interest rates, I believe we are heading for a recession.
The Consumer Price Index (CPI) in September 2022 is still climbing up 0.4 percent after rising 0.1 percent in August and I think it is going to continue to increase.
The CPI is a comparison of the prices of items from a certain period of time. September 2022 from August 2022 the item prices rose an average 0.4 percent.
The 12 months CPI in September 2022 is 8.2 percent. I think this means that comparing September 2021 to September 2022, the item prices are 8.2 percent more expensive in September 2022 compared to September 2021.
As I understand from following a certain Youtuber, since the CPI is high we could say that we are having high inflation and so the FED wants to bring down inflation by raising interest rates.
Rising interest rates makes it harder for businesses and for people like you and me to borrow money cheaply. This will prevent us from spending too much and I think the FED is hoping to bring inflation down this way.
If it is hard to borrow money and people spend less, business earnings will go down and this scares investors and that’s why we see that the stock market is also going down.
How To Build Wealth And Invest In A Recession
There are 3 good investments where we should be putting our money in.
These 3 are the go to investments that I’ve seen most wealthy people invest in. I only started investing in some of them, but hopefully in the future I can invest on all of them.
As far as I know those 3 would be investing in Real Estate, Business and in the Stock Market.
Investing In Real Estate To Build Wealth
There are multiple ways to invest in real estate. You could buy properties to be rented out, buy Real Estate Investment Trusts (REIT) or Real Estate Investment Groups (REIG), you could flip land or fixer upper houses, or you could invest in Real Estate online investing platforms a.k.a real estate crowdfunding.
Investing in real estate usually requires a large capital and right now I don’t have the capital to start some of the above mentioned.
I am able to start investing in an REIT and in a real estate crowdfunding platform since they did not require a very large capital.
For REITs you can invest any comfortable amount you’re able and it is like investing in the stock market.
For the crowdfunding platform I use Fundrise and was able to start investing in real estate for $500.
I only started and was not able to consistently put in money for these 2 investments and so their growth was slow.
My goal is to earn more income to be able to invest more in real estate.
A Youtuber I follow is expecting that real estate prices will soon drop because of the high interest rates. And he has cash reserves ready to buy homes for rent when the prices drop.
Investing In A Business
Currently I don’t own a business and I probably know little about this investment opportunity.
I think the best place to start is to invest in your knowledge on how businesses work.
I don’t know if it counts, but I started this blog and I’m hoping it will become a business for me someday.
Investing In The Stock Market To Build Wealth
This will be where I will be investing most of my extra income at this time.
I am using the Robinhood app to invest in the stock market.
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I am putting my extra money in these paper assets that have dropped in value. These assets are trading at a 20% average discount right now.
That means stocks are trading at a low price right now and I would continue to buy my favorite ETFs every month.
If you can, I think we need to be investing our extra money right now, dollar cost average and build wealth when these assets grow in value 5, 7, 10 years from now.
In every bear market, history tells us it will be followed by a bull market guys. Buy your favorite stocks or ETFs at a discount now and hold them.
Also history shows us that the S&P 500 has an average of growing 8 to 10% every year. So based on this history, top US stocks will at some point go back up.
I am investing in 3 high dividend ETFs right now and this is where I am investing my extra income.
I am investing in ETFs so I don’t have to pick individual stocks. And I choose to invest in the top high dividend stocks as these top stocks has shown that they can give back dividends to their investors.
And they have to be top blue chip dividend stocks picked out already by the experts who created these ETFs.
All I have to do is buy the high dividend ETF every month and I keep the ETF long term. Earn from the growth and from the dividends. This will be my wealth building game plan for now.
Conclusion: How To Invest And Build Wealth In A Recession
It is not clear yet and the FED hasn’t confirmed yet but I think we are in a recession or heading to a recession.
Inflation is here and prices for goods and services are up. The FED will continue to increase the interest rates until it comes down.
Since interest rates are high, some assets have fallen like house prices and stock prices. And these assets are at a discount especially blue chip companies.
Blue chip companies are down an average of 20% and this is a good time to buy, invest and build wealth.
A fair warning not to invest money that you would need right now though, you’ll need to invest money that you can afford to hold for years.
Investing involves risk and you’ll need to do your own due diligence to research and assess your risk tolerance.
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