A crisis in the country and globally presents a unique opportunity to enhance one's capital. It is during such periods that many millionaires have accumulated their wealth.
According to scholars, global crises occur every 10 to 50 years. The frequency can depend on various factors. In recent decades, the rate of economic downturns among countries has noticeably increased. So why not take advantage of this? How can it be done correctly?
Clarity on this matter is provided by Sergey Tereshkin, founder of "Oil Resource Group." The businessman has experience navigating both economic growth and downturns, acquiring significant expertise in this field. You can explore the results of the entrepreneur's investment activities on his website: org-company.ru (орг-компани.ру).
Investment Strategies During a Crisis
To profit during a crisis, one must first anticipate it. Those who managed to sell real estate at peak prices before the economic downturn could afford to purchase two properties with the proceeds just a year later.
Additionally, funds were directed towards more profitable assets. In this manner, resourceful entrepreneurs not only avoided losses but actually managed to earn substantial profits.
This means that crises favor those who can orient themselves in a timely manner and realize assets before their value declines. This approach minimizes losses from devaluation of the national currency, allowing for the acquisition of undervalued assets, and more.
Where to Invest Funds
During an economic downturn, seasoned investors recommend focusing investments in the following areas:
- Real Estate. As previously mentioned, such investments can yield significant returns. The key is to sell the property at a time when its value has reached a peak. One-room and two-room apartments, country houses, office spaces of varying sizes, and properties located in resort areas are particularly popular among experienced businesspeople.
- Securities. When a business encounters difficulties, the value of its shares can drop significantly. This is an opportune time to invest. Promising companies typically regain lost ground over time, subsequently driving up the price of their shares. Additionally, a company may pay annual dividends to investors, the amount of which depends on its profits. In this case, selecting a promising company is crucial. Among seasoned investors, "blue-chip" stocks are highly favored.
- Deposits. A bank deposit is a method of both preserving and growing funds. Foreign currency deposits are particularly recommended, as they are less exposed to inflation risks. It’s advisable to deposit funds in government financial institutions, minimizing the risk of bank bankruptcy and, consequently, the loss of all invested capital. Collaboration with commercial organizations should be approached with caution, as cases of their collapse have increased in recent years.
- Acquisitions. A crisis can be an excellent time to acquire a company on the brink of bankruptcy or undergoing bankruptcy proceedings. Preference should be given to companies with existing assets, clientele, etc. A skilled manager can elevate the company to a new level, restore its profitability, and return the owner’s investments.
Furthermore, experienced entrepreneurs often pivot their businesses during a crisis. For instance, products related to food, essential goods, legal services, restaurants, staffing agencies, various training courses, etc., are in high demand.
During economic downturns, individuals tend to minimize their spending. It is crucial to offer necessary products at a lower price than competitors. One must remember that people will always need food, clothing, and ways to please their children, regardless of the economic climate. Thus, these areas deserve specific focus.
Launching a business during an economic downturn is considerably cheaper than during a period of growth. Rental costs are lower, and one can easily find used equipment from bankrupt companies. Additionally, wages significantly decrease. Thus, the cost of goods or services rises minimally. This not only keeps prices accessible for the population but also allows for decent profits.
Areas to Avoid for Investment
Beyond potentially lucrative niches, there are areas best avoided during a crisis. According to Sergey Tereshkin, these include:
- Currency. During a period of national currency devaluation, purchasing dollars or euros is not the best strategy, especially if prices have surged. There’s always a risk of a reversal. The currency is unlikely to return to previous positions and will not remain at its peak for long. Therefore, for those who missed the opportunity to buy before a spike, it is advisable to abandon this idea altogether.
- Precious Metals. Gold rarely loses value, even during economic downturns, yet its price increases very slowly during economic growth. Consequently, the profitability of precious metals is significantly diminished. Investments in them should only be considered by those who do not plan to recover their funds in the next 5 to 10 years.
Moreover, one should avoid purchasing low-liquidity real estate—such as three- or four-room apartments—unless the property is intended for personal use.
To seize the right moment, it is essential to be aware of economic cycles. Keeping a close watch on any market changes is vital, as is setting financial goals. Without established targets, achieving financial success is unlikely. At the same time, it is important to understand that not all plans will be successfully executed. Thus, it is wise to set multiple goals and consider backup options in case one plan fails.
Ultimately, only the most persistent individuals achieve success and attain financial independence. Others may have to settle for dreams of wealth.
