The Best Way to Turn a Profit from Investments During a Recession

Recession is a word which strikes fear into the hearts of many, representing as it does a period of economic downturn that could have disastrous consequences for businesses and households alike. With a recession on the way in the UK, many are waiting for their fears to be realised. But a recession does not have to be bad news, and profits are still there to be made even as the economy shrinks. What ways can you see returns on your wealth during a pandemic?

Stocks

The quintessential method of investment in the modern economy occurs through investment in business. There re many ways in which one can grow their wealth via business, from venture capital to peer-to-peer lending, but the single most common is through investment on the stock market.

In a recession, a shrinking economy usually results in the value of businesses shrinking across the board – with some businesses affected more than others. Companies will see their share prices fall to record lows, but many of these companies are robust enough to weather the downturn. The shrewd investor buys these stocks at their new lower price, and profits when they inevitably rebound after the recession.

CFDs

For the budding investor with little in the way of available funds for investment, stocks and assets can be prohibitively expensive; turning a profit from asset investment in particular requires the purchase of the assets outright, which is beyond the capabilities of the vast majority of individual investors.

However, there are ways in which traders can profit from market movements without need to directly interact with them. For example, CFDs enable traders to profit from the changing value of financial products in markets and exchanges, by executing derivative contracts that enable access to large positions without the monetary expense of opening a position directly.

Foreign Exchange

Foreign exchange, or forex, describes the trading of currencies in national foreign exchange markets. Currencies are typically evaluated relative to other currencies, forming currency pairs that better illustrate fluctuations in value over time.

As the UK nears recession, the pound sterling has been in freefall. As of September 2022, the pound is at its lowest value relative to the dollar since the 1980s. While this is bad news for individuals whose wealth is in pounds, forex traders can take advantage of strengthening currencies elsewhere. By trading pounds sterling for US dollars, investors can take advantage of a rallying dollar and grow their money.

Property

Lastly, property is an evergreen option for growing wealth. It also remains a safe and even lucrative option in times of recession. This is because the property market reliably returns growth, owing to high demand for property and relative divorce from movements of other markets.

The property market has seen unusual growth in recent years, and is poised for a significant slow in growth as the recession nears. However, its growth potential still outstrips the Bank of England’s interest rates, presenting a robust option for turning a profit.