How To Make Money From Economic Collapse In South Africa

How To Make Money From Economic Collapse In South Africa

Overview

The South African economy has been on the receiving end since 2009. It has, since then, never returned to its initial levels of economic growth pre-2007/2008 global downturn (financial crisis). The crisis is reported to have lead to job losses of about 1 million.

How To Make Money From Economic Collapse In South Africa

Economists are growing increasingly concerned about South Africa’s economy. This is because the country’s three major macroeconomic problems – lacklustre economic growth, growing inflation, and very high unemployment – have been exacerbated by a series of major disruptions.

Majorly people find the recession’s situation intricate, as they lose their earning sources. If you have enough savings and liquid funds then you can invest in those during the recession. But if you do not have sufficient funds then you have to be cautious and take some prime steps to sustain in slower economic conditions.

Tips on How To Manage and Make Money During Economic Collapse

1. Safeguard Your Earning Sources

If you lose your source of income then it might be possible that you can spend your savings on finding new jobs. So you have to secure your job first and if you are in business then you have to ensure its future growth. Besides this, you have to be cautious about your job role and the financial stability of the employer. 

2. Enhance Savings

To overcome the challenges of the recession you have to save a substantial part of your income every month. You can do this by making a list of your expenses such as house rent, car payments, insurance premiums, and even small expenses made on groceries. At the end of the month, you do the total of all these expenditures and check if there is any item that can be reduced from the list. In other words, this list will provide you with the data on the expenses that have been made and also give you an outlook of the useless expenditures.

3. Investments

We probably invest our sums in short-term and long-term plans. So you have to keep a constant eye on your short-term investments and if you find this risky then you can move the money to safer harbors. Such as precious metals, dividends, stock market, and many more. As far as long-term investments are considered you can seek the asset during the recession as the prices are low and keep it as your long-term asset.  

4. Investing in Discounted Stocks

In a recession, the prices of stocks fall. You can invest in highly discounted stocks that provide you diversification among funds that you can buy at deeper discounts. The stock values vary every six months, and if the stock market is rising, you can sell your shares or keep them. With this, you should also know about SLBM stock lending and borrowing mechanism as it can help you in coping with the challenges of recession. 

5. Track Your Net worth

Checking your net worth every month is beneficial for you as it motivates you to keep good financial habits of savings and investing. So this is the most important tool for making money during a recession. In the short term, you may not see good results but in the long term, you would surely get the desired outcomes.

6. Plan for Future

To get over the challenges of the recession you should make the proper planning of investing and earning. It is not good to make financial decisions suddenly, therefore you should take time and then plan the future according to the present financial and market state.

7. Generate Passive Income

You can opt for the tools of creating income through passive investing and can cover living expenses. This would make your day job optional and would enhance your financial independence. Besides this, it would enable you to pursue your dream work regardless of its paying structure. You no longer have to pay for the costs of life insurance and disability insurance. 

9. Buying Investment Properties

You know that during the recession the housing market does not fall as speedily as the stock market. So if you are investing in real estate then you can have a great deal even in the slowdown of the economy. The logic behind this is that the prices of the homes can fall but the rent doesn’t fall.

10. Selling the unused Stuff

 It is the most common and easy step that can help you in making money during a recession. You can sell your stuff on e-commerce platforms like eBay and Amazon. It would bring you slight liquidity.

11. Move into Survival Mode

During the recession, you have to change your mindset as the money-making concept starts from there. So you have to keep a thought in mind of “spend less and earn more”. In short, your pocket should know that things are not the same again and it needs a different way to move.

12. Go-Liquid

A recession is not the time to level the money in banks or in the hands of the people from which it is complicated to collect. Take cash as it ensures that you are more protective of systematic failures.

13. Buying a Business

During a recession, you have the chance to buy a business that is in loss or not in a good state. Thus buying a new business and investing cash in it can be the best way to keep the business and former owners afloat. In this way, you save good businesses and make money.

Thus it can be said that the government and the industries both have to work for bridging economic opportunities during the recession. Besides this, they must focus on the elements which boost economic growth.

Frequently Asked Questions (FAQs)

What should I invest in during economic downturn?

Sectors that tend to perform well during recessions

  • Communication services.
  • Consumer discretionary.
  • Consumer staples.
  • Energy.
  • Financials.
  • Health care.
  • Industrials.
  • Information technology.

What businesses do well in a downturn in South Africa?

Healthcare, food, consumer staples, and basic transportation are examples of relatively inelastic industries that can perform well in recessions. They may also benefit from being considered essential industries during a public health emergency like the COVID-19 pandemic.

How do you survive a recession in South Africa?

The best things to do in a recession include:

  1. Live within your means. Experts recommend you should spend only 30 percent of your net income.
  2. Identify your risk tolerance. It’s a good idea to work with a financial advisor on identifying your risk profile.
  3. Continue your education and build up skills.
  4. Pay down debt.

IS cash good in a recession in South Africa?

Liquidity. Your biggest risk in a recession is the loss of your job if you’re still employed or semi-employed. If you need to tap your savings for living expenses, a cash account is your best bet. Stocks tend to suffer in a recession, and you don’t want to have to sell stocks in a falling market.

What industry is recession-proof in South Africa?

While this list is not exhaustive, consumer staples, grocery stores, and discount stores, luxury goods, healthcare and pharmaceuticals, and vice industries are all recession-proof industries that can provide investment opportunities for savvy economic developers to explore during economic downturns.

What industries are hit hardest by a recession in South Africa?

Retail, restaurants, and hotels aren’t the only businesses often hurt during a recession. Automotive, oil and gas, sports, real estate, and many others see heavy declines during times like these.

When the market crashes What goes up in South Africa?

Gold, silver, and bonds are the classics that traditionally stay stable or rise when the markets crash. We’ll look at gold and silver first. In theory, gold and silver hold their value over time. This makes them attractive when the stock market is volatile, and the increased demand drives the prices up.

Do house prices drop in a recession in South Africa?

How does a recession affect the real estate market?
Recessions typically depress prices in most markets, including real estate markets. Bad economic conditions could mean there are fewer homebuyers with disposable income. As demand decreases, home prices fall, and real estate income stagnates.

What products sell best during a recession?

8 recession-proof product types in South Africa

  1. Beauty, hair, and skincare products.
  2. Nutrition products, meal replacements, and protein powders.
  3. Sports and fitness.
  4. Home and cleaning essentials.
  5. Inexpensive entertainment.
  6. Pet care essentials.
  7. Food and beverages.
  8. Diapers and baby products.