From a financial standpoint, though times are challenging, you need to exploit the current situation to the best of your ability. As much as I feel the word “exploit” is somewhat disingenuous, in my opinion, it is exactly what you need to be doing right now.
For those of you who know me, know my heart and soul are pure, but we live in a world where if you don’t eat, someone else will eat you. And I don’t want that to happen to you. While others contract, you expand. While others are fearful, you get greedy. While others do nothing, you double down on everything.
I was fortunate enough to have somewhat predicted this $#%@ show that we are experiencing in the world right now. Not from a pandemic standpoint, but more so from an economic standpoint. With that being said, I’m pretty good at talking myself out of business for the benefit of others and have done so for the last seven years when it comes to my turnkey company.
So, I might as well do it again.
What About Real Estate?
I know we all love real estate because it’s a safe haven. Real estate is an asset that you can touch, see, and feel, and it makes sense in so many ways. But for those who can swallow the swings of the stock market, it is my opinion that you should be investing in stocks right now, not necessarily real estate.
You can buy established companies at a 50% discount or more! Some have good earnings growth, pay consistent dividends, and have very healthy balance sheets.
But then again, what do I know? I’m not a stock guy. I’m a real estate guy, so take my advice with a grain of salt.
Related: Why Real Estate Beats Stocks During a Recession
Why You Should Invest in Stocks Right Now
Still, here is my simple thought process—and maybe you’ll agree.
- Stocks go to $#@% first, then the economy, and lastly real estate.
- There are opportunities like this only once every 10 years or so, where amateurs like you and me can do really well investing in stocks no matter what stocks we pick (as long as they are big conglomerates in the S&P 500).
- Diversify between 10-20 companies and hold for 12-24 months, if not longer.
- Sell and gain 50-100% on your invested capital.
- Invest in real estate (buy and hold properties).
Here is a chart of every 20% decline we have had in the last 100 years and the returns within the first 12 months when the market did finally take off and go bull.
It is my belief that you can grow your wealth much quicker in the current climate by investing in stocks. However, as I mentioned above, please take this blog with a grain of salt because I usually am the dumbest guy in the room and don’t claim to be any smarter today than I was 12 years ago.
What If You Don’t Know Anything About Stocks?
I will say this though, I have been quite infatuated with stocks since 2008. I missed that market downturn because I was still very young and raw. I told myself that I didn’t want to miss another one, so over the last 12 years, I have sporadically studied Warren Buffet and his investing style. I’ve also been sitting on dry powder, or cash, since mid-2019.
I highly recommend the books How to Pick Stocks Like Warren Buffet and The Intelligent Investor to mold your thoughts/investment philosophy when it comes to stocks.
Related: What Offers the Best Return on Investment? 145 Years of Real Estate vs. Stocks
It’s fair to say that I’ve been waiting for this moment to invest for over 10 years and time will tell if my instincts were right. So far I’m up 30% and have bought in very close to the bottom. Beginner’s luck maybe, or 10-plus years of study and patience?
Never forget that you should only invest what you can afford to lose. This rings true not just for stocks but also for real estate.
Are you buying stocks right now? What are your picks?
Tell us your tricks in the comments below.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.