Markets Are Crazy Right Now… Read This Before You Invest

Coronavirus Scary

Lately, the question on everybody’s mind seems to be, “Is a global recession around the corner?”

Although we cannot definitively say “yes”, many global economists believe the answer is a matter of when rather than if. But worry not, little ostrich. Before you decide to bury your head in the ground and live in denial like my mom who still believes I could’ve been a doctor, let me explain.

Recessions are a cyclical component of economies and are natural, like male pattern baldness. They’re to be prepared for, not to hide from. To give you an idea, a full business cycle is approximately 5 years and is followed by a period of slower activity, that on average, lasts 1.5 years (well, in the US at least).

As far as the global economy goes, many factors point toward this imminent future. For starters, the two largest economies are at a trade war with one another, the yield curve for the US bond market is “inverting”, and economic growth in the US is slowing down. Across the pond things aren’t that much rosier; Brexit is still as uncertain as ever, there’s been a long recession in Germany, and the Chinese debt crisis is worrisome for many.

All this and we have yet to see the effects of the Corona Virus play out. It has already caused massive disruptions in manufacturing and logistics in China. The tech industry especially is bracing for a supply shortage that might possibly extend well into the end of the year.  So yeah… that happened…

But I digress, this article isn’t about the reasons why a recession is looming, but about the solutions at your disposal to manage your wealth during such times. During a recession, it’s normal to see a dip in the equity market (i.e., stocks) and peak in the bond market (e.g., government bonds). We can get into why this is the case later, but for now, those are the facts.

That means – if you’re currently investing most of your money in stocks and bonds, you may not be offsetting your risk and growing your wealth as much as you can. Sure, having government bonds in your investment portfolio offsets the dip in stock prices, but is that really all you want to do? Offset and reduce your risk during a slowdown? What if there was a way to further reduce your risk and increase your wealth comparatively during a recession?

There is, but unfortunately for most, it’s beyond reach.

I’m talking about residential real estate.

Remarkably, when you add residential real estate into your investment portfolio, not only do you reduce your overall risk, but you also end up making more money. Apart from government bonds, residential real estate is the only other asset class that gives a higher return when the stock market is decreasing. In fact, a team of economists conducted a study on the return of investments of various assets (including stocks and real estate) over the course of 145 years. The results? Residential real estate outperformed every other asset class, including stocks.

“That’s great, Hassan but I’m not exactly rolling around in a tub of money like Mayweather” (note: please don’t, even if you can. Unfortunately, money can’t buy class).

And that’s where SmartCrowd can help. I know, I know – before you think I’m trying to put on a hard sell, I’m not. I’m just excited to tell you that individuals like yourself can invest in real estate, reduce your risk, and increase your overall wealth from the comfort of your home in denominations that are affordable to you. As mentioned previously, getting into residential real estate as an investment traditionally requires a lot of capital. Fortunately, if you’re looking to recession-proof your wealth and earn more during the slowdown, you may want to consider real estate crowdfunding as an option.

Oh, and never burry your head – denial never leads to anything good (you hear that, mom?).

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SmartCrowd is MENA’s first and largest regulated Real Estate Investments Platform enabling people to directly invest in attractive investment properties at a fraction of total prices using a crowdfunding model.
Starting From AED 500 ($140)