Here’s a headline that recently showed up in my inbox:
“WORST PERFORMANCE IN 50 YEARS”
What was this dire headline referring to? The Rolling Stones going on yet another goodbye tour?
No — it was about the stock market.
You’ve likely seen similar headlines, because in the first six months of this year, the stock market had its worst half-year performance since 1970. Before that? According to recent reporting in the New York Times, “analysts at Deutsche Bank had to go all the way back to the late 18th century to find a worst half-year performance for equivalent bonds.”
Jim Reid, head of credit strategy and research at Deutsche Bank, went on to say: “The fall in stocks so far would be an extreme outlier if it weren’t accompanied by a recession.”
Translation: things are not looking great for the stock market and are not likely to improve for a while.
Investing in the stock market can feel like “feast or famine.” But I’m telling you that it doesn’t have to be this way.
Look, I get it. For a long time, the stock market seemed like THE place to be. It’s how most people get into investing in the first place, and where they stay long-term to build up savings and retirement.
That’s why it’s so crushing when the stock market dips and people lose momentum — or worse, actual capital — when growing their wealth.
We’ve referred to the stock market as a roller coaster, with its extreme highs and lows. It’s why we visualize the market trends over time on our website because seeing that volatility is so impactful.
But roller coasters should be fun… and losing time and money is typically NOT fun.
It’s not enough for us to tell you to get off the roller coaster, so I want to give you some actionable steps for growing your wealth in the midst of inflation, stock market shakeups, and a recession.
Consider alternative investments.
Alternative investments, or “alts,” are investments not correlated with the stock market. Alts include options such as real estate. We just wrote about why alts are on the up and up here. (Although you probably already know this and that is why you are reading this article.)
Many think that real estate investing can be just as risky, unpredictable, and volatile as the stock market, and that’s true — if you invest in real estate where the markets do act like that. That’s why we always say that we love “boring markets.” Our main niche is workforce housing in places like the Midwest, where home values have stayed relatively consistent for several decades. People always need an affordable place to live, so we can still get the benefits of cash-flowing properties without having to constantly time the real estate market.
That last sentence is worth repeating: The key is to always have cash flow, because with cash flow, you can get through any rainy days.
Another powerful tool? Your equity.
Freeing your “trapped equity” can be a very powerful and profitable tool in your wealth-building toolkit. When you can put your equity to work by reinvesting it, you get the full return on 100% of it. This is especially important during times of inflation.
Think of it this way: You own an investment property that you have paid off completely. That trapped equity is similar to you leaving that much cash in a savings account. It’s just sitting there, not doing anything for you, and losing value due to inflation. And during inflationary periods, that may be one of the last things you want to do with your wealth.
Our two-part series on trapped equity will hopefully inspire and motivate you to put that “lazy equity” to WORK! Part 1 is about freeing equity in your business and commercial properties, and part 2 is about leveraging your own home equity.
At the end of the day, you may still decide to keep stocks as a part of your portfolio. Many people will likely take that approach. But I hope you’ll consider these other ways you can grow your hard-earned money without strapping it to a roller coaster and begrudgingly going along for the ride.