Have you ever wondered where all the money made before the recession go?
Before the recession, things were much easier and better. You could do a small job and get paid handsomely.
You could afford to eat in any restaurant you wanted and clean your mouth with the back of your hand without thinking about how much the food cost.
Everyone you know seems to complain less about money. When the pastor in your church called for donations, the problem was not the lack of money, but who would out bid who.
But let him try him it now. He will be lucky to get half of what he is asking for.
There was so much car on the streets because fuel was cheap.
There is always a new car in your street every month because your neighbours could afford to buy one.
And then, the noisy generators. Some people complain that they cannot sleep without electricity. It is not when you have the money to fuel your generator?
They complained because the economy was good. Now, the economy has gone bad. They will be happy if they can leave it on until 10 pm.
Life was good.
All of a sudden all the money is gone.
Nobody seems to buy a new car these days. You will be lucky to be able to buy food in any “Mama Put” around the corner instead of your fancy restaurant.
Where did all that money go to?
Honestly, I cannot answer that. It has and will remain a burning question to economists.
Why did I point it out here then?
Because it is in that period that fortunes are made. It is in that period that people with good money management skills build fortunes that last for generations.
Are you surprised at this?
- 7 Simple Ways to Save Your Money
- 5 Things You Should Never do With Your Savings if You Want to Be Wealthy
- What you Need to Know About Bonds
Let me give you an example. I mentioned this in a post that I made last week – 3 Simple ways to achieve financial freedom.
While a lot of people are complaining about the recession, people are making fortunes on the stock market.
This year alone some companies returned 200% and above. Some have even achieved 400%.
I am not going to call any company because it is not my job to promote company’s stocks. I will leave that to analyst and stock brokers.
During the recession, prices of consumer goods are high, but assets are very cheap.
That is why the people that are able to able to accumulate a lot of reserves will benefit in this time and acquire a lot of fortune.
In a recession, the economy is in chaos, people are struggling to feed themselves and their families.
There are no jobs, the ones that are employed, are not safe. In fact, a lot of them will be laid off.
The result is that so many assets that were not originally in the market will suddenly become available for sale.
Since so many have lost their jobs, so many are owed salary, inflation has eaten deep into the purchasing power so that a bag of pure water is now sold for 150 naira, making your money worthless.
In a bid to survive, people will start selling their assets – cars, land, building, stocks etc.
But they will face a serious problem because the economy is affecting everyone. Nobody will be willing to buy. For them to find anybody willing, they will have to reduce and reduce the price.
In the stock market, fear creeps in. Nobody will see anything good about the market. The analyst will predict a 100% decline in the price of a stock that just made a 30% rise in profits and still have so much potential to make cash.
The prices of stocks will take a hit. Everything will decline with the speed of light. The more they decline, the more people are filled with fear. They fear that in no time, their stock holdings will be worthless.
As a result, they will begin a frantic selling, bringing down prices of stocks down the more.
The economy is messed up, prices of stocks are almost touching the floor, land and all other assets are almost worthless.
But there are few souls with enough cash, buying up lands, buildings, companies, stocks and other forms of assets. Assets that have been sold because the sellers needed cash and will sell at any price to survive.
These few souls in that time of recession live well. They will never complain about anything. They are only on one mission – an active search for a cheap asset to buy.
“Be fearful when others are greedy and greedy when others are fearful”
They know that they can find it as easily as they wanted and as cheap as cheap can be.
A lot of people see the recession as a bad thing. That is okay. After all, what will you call something that leaves almost everyone worse off?
But it is almost always necessary for an economy to experience recession once in a while. You can read this to find out why recession is a good thing.
Why am I making all these emphases,
To emphasize the need to have a reserve. And you can only build that reserve through savings.
You have to be to take advantage of these opportunities anytime they may occur. And you never know when. That is why you have to be ready.
If you already have your own reserve, begin an active search for where to invest it. There is an opportunity for everyone no matter how small your savings are.
Remember, your savings is not enough to push you to wealth. You must actively invest it.
If you do not have any reserve, you have to start building one.
You might not be lucky to invest it at this time but don’t worry, the government will make sure – with their bad policies – that the recession will return again.
In fact, economists have not been able to control it for centuries.
But you don’t have to invest only during the recession, good investment opportunities come both in bad and in good times. You only have to ready to grab them whenever they come.