Yahoo Finance 7 Things To Do To Build Wealth in the Next Recession, According to Money Expert Jaspreet Singh
No one wants to see a recession happen, but there are ways to money off it. That’s the theory behind Jaspreet Singh’s video about the seven things to do to build wealth in the next recession. If you are thinking that sounds counterintuitive, you just aren’t in the correct mindset yet — the “Minority Mindset,” as Singh calls it.
“The Minority Mindset has nothing to do with the way you look. It’s the mindset of thinking differently than the majority of people,” Singh said.
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“The reality is that more millionaires are made during recessions than at any other time,” Singh said, citing how the United States has seen a recession almost every decade for the last century. “The problem is most people start preparing after it is too late.”
Singh shared some of his experiences and insights to prepare you for the next time the market goes belly-up. Here are seven things, according to Singh, that you can do in order to get rich the next time there is a recession.
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Understand ‘POOP’
It all starts with “POOP.” (Yes, you read that right.)
Singh said this acronym stands for “panic, overselling, opportunity, profits,” which is a way of explaining what happens when there is a downward shift in economic trends. Every recession triggers this reaction across multiple markets, leaving an opportunity to strike it big.
“If you want this to happen, you have to be prepared. You have to be financially educated,” Singh said. “If you look at any economic downturn in the last century, POOP has played out.”
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Emergency Savings
Singh recommended everyone keep some emergency savings on hand at all times.
“The reason why so many people get burned and hurt financially when you see an economic downturn is because people lose their jobs, which is, of course, bad,” Singh explained. “But the real reason why it becomes so much more devastating is because most people have no savings cushion.”
Singh recommended saving $2,000 as soon as possible to start. From there, he suggested having anywhere between three and 12 months’ worth of expenses saved in case the worst happens.
Build Opportunity Savings
Another key to getting rich during a recession is having money set aside to capitalize on opportunities as they arise.
“Let’s just say you don’t know how to analyze stocks, but you know that you want to invest in stocks. And then tomorrow, the stock market were to fall by 90%,” Singh said. While that may seem like a great time to buy stocks, it doesn’t do you any good unless you actually have money to invest.
Singh explained that you need money not just to protect yourself but to capitalize on opportunities and have a real shot at making a profit. “You also have to have some opportunity savings,” he said.
Invest In Your Financial Education
Singh said you need to invest in your financial education today. Investing in your financial education means understanding the financial news, understanding the financial trends and understanding financial literacy.
Singh explained it’s all about understanding what is happening in the global markets as well as where the flow of money is going. Once you have the knowledge, you can make smart investments for yourself.
“You don’t want to play catch up here. You want to be ahead of the game,” he said.
Drive a Car You Can Afford
Singh noted that the first bill most people stop paying during a recession isn’t on their house but on their car. “If you drive a car that you cannot afford, well, this car can create a lot of stress,” Singh said. “Now you have this $600 a month car payment when you are struggling to eat. That’s a situation you want to avoid.”
In order to avoid that, Singh suggested buying only a car you can afford. “The best thing you can do is to buy a car with cash,” he said. “That way, you don’t have to worry about the payments.”
Pay Off Consumer Debt
Getting rid of your personal loans is a huge step to financial success, in Singh’s professional opinion. This includes credit card debt, payday loans and any other debts “that are not adding any money to your pocket but they take money out of your pocket every single month.”
Singh also advocated paying down debts like this more aggressively in good economic times in order to be prepared for any bad ones ahead.
Live Within Your Means
Lastly, you need to live within your means. “You’ve got to be willing to take a pay cut. That way, you have money to save and invest every month,” Singh said, expanding on the concept that if you make $1,000, you should not go out and spend $999 of it.
“Living within your means means you make $1,000 and then you spend no more than $750,” Singh said. “You’re investing at least $150, and you’re saving at least $100. This way, you are putting some money aside for savings, you are putting some money aside to be invested and you’re putting some money aside to be spent.”
In order to create wealth, Singh highlighted how critical it is to live within your means. In order to make wealth, you need to have an income and save it. From there, he said, you need to grow your wealth, which you can do through investing.
Singh explained that the more you save and invest, the more money you’ll have down the line to keep saving and investing — growing your wealth over time to ensure that you have ample funds in your account, regardless of whether there is an economic recession or not.
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