Investment Strategies in a Faltering Economy

Where to Put Your Money when Times Are Tough

No matter what the economy is like, there are several things that every person needs. The businesses that cater to those needs will be able to pull through the slump that the economy is facing. No matter how bad things get, people will still need food, clothing, and shelter. These needs will always trump desire when money starts to get tight. Clothing is a vast market and some of these companies may still close. The fact that clothing can be re-used is one thing that is harmful to this industry, but food cannot be re-eaten and shelter can only be used by so many people. These are the investments that will stand in the wake of the bad times.

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Food is a big industry that may be hit hard, but will never totally crumble. People have to eat to survive. No matter how bad things get, money will be spent on food. This means that businesses here will be a safe bet to survive the times. You have to be wary though because not all of them are safe. There are many in this industry that will struggle. The high cost, extravagant stores will be in trouble in the long run. There are many affluent now and they will continue to live their lives in the same fashion. The problem will be whether the market rebounds before their money gets tight. Just the scare of the economy plummeting again has kept many of the rich from spending excessively. Anything considered three stars or more will eventually struggle and may crash like so many other businesses. The good investments in this area would be major supermarkets that can offer discount prices. They will be able to weather the storm due to shear volume of sales. Fast food and inexpensive cafes and diners will stand to do well. People will not sit and wallow in sorrow their entire lives, regardless of lack of money. All families will need to get out at least once a month. This may be down graded from a Chuck E. Cheese type center to dollar menu specials at the corner burger shop. Regardless of the times, the occasional out is mandatory. Investments like McDonald’s, IHOP, and Denny’s would stand to make a profit. They will continue to rake in the earnings. The profits of any of these venues will be lower but they will still be there.

House sold sign in suburban midwest.

One good thing to come out of the horrid housing market is the investment opportunities. For someone with a substantial amount of money and good credit, this could mean millions. The next Donald Trump could emerge from this housing market. Due to job losses and the ARM scams that were going on, many homes are in foreclosure. This allows for cheap prices to solid investments. By buying up mass amounts of houses at a cheap cost, they can be rented to cover the mortgage payment. By cutting the rent to below the mortgage payment, you can even get tax breaks. This will take a considerable amount of the pressure off your wallet. You can then turn around and sell them for a massive profit once the market levels off again. Even on a much smaller scale, if you have the credit to get a fixed rate mortgage, you can stand to pick up a home or two, rent part or both out, and make some money now. You can then sell for a profit and get a nice place in your choice of areas after this is over. Real estate has always been a great investment and always will be. The fact that people desire to own their own home will always make profits in this market. Real estate will always be a steady market. It may decline, but those are the best spots to buy. Regardless of the current trend, there is always a value in property.

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No matter where it is that you decide to invest, there are always risks and precautions that you will need to keep in mind. You will need to research trends and the overall stability of the business that you plan to invest in. Even if a company had a monopoly on the world’s oxygen supply, they could still go under with a bad management team. This is true no matter what the current market is like. You should also look at the product that is being sold. If it is a luxury item, they will not likely survive a market crash like the one we are headed into. For your money’s sake, you will need to be very honest about this. Just because you cannot live without the new Blackberry, does not make it a necessity to everyone. When it comes to the property aspect, you will want to consider the location. There may be some cheap property in a certain location but its value may not increase due to the location. If there is construction planned nearby, you will want to know what is being built. You may end up with a patch of land on the median of the interstate if you are not careful. There is also the development aspect. If there are several investors buying around you to build condominiums, you may find your land blighted and losing money. Single-family homes and apartment complexes in residential areas are usually a safe bet. They will be used for many more decades. Industrial and business districts may not be as good unless you have a firm plan for the property and know what you are doing. For the beginning investor, you will want to stay with housing in the suburbs or other residential areas.

There are still many areas to invest money that can stand the test of the market. Selling other investments now while they are up, could create more funds to invest in the near future when the market bottoms out. Buying the stocks and properties at the low prices stands to make more when the upswing hits. You could even end up with majority shares in some of these companies if you stage the purchases correctly. The key to your nest egg surviving this market situation is to invest in the fundamentals of life. Food, water, shelter, and clothing are all needed to survive. Everything else is just extras. In a time when extras are not attainable, you must invest in the necessary.

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