Building Wealth In A Recession

by Dual Income No Kids on November 21, 2008 · 0 comments

Its hard to do.

Recessions are defined by a generalized shrinkage in economic activity – this includes contractions in spending, investing, economic growth and hiring. What it means is that in a recession year, its harder for everyone to make money, so one’s success at building wealth should be judged accordingly.

That said, here two ideas for building wealth in a recession:

1) Investing in industries that sell inexpensive products. Companies like McDonalds (MCD) and Wal-Mart (WMT) which sell inexpensive food and consumer goods are doing better than most. Also, Family Dollar Stores (FDO) and Dollar Tree (DLTR) haven’t done as badly as some others.

2) Being in new industries. Companies in relatively new technologies fared well during the great depression. Of course, back then they were technologies like radio, telephones and suppliers and services for those industries. Today, the internet is still pretty new, so you might look to companies that serve the web. For example we’re still seeing some demand for advertising on our webpage, even thought its been a bit softer lately.

Finally, you ought to consider sticking with the basics. These include spending less than you earn, taking advantage of 401k and IRA deductions and saving and investing prudently. It doesn’t make sense to hoard your money under the mattress. Ultimately, you’ll have to be “in the game” to make progress building wealth.

Best,

James

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