by Allen Teal

Created on: November 04, 2008   Last Updated: December 28, 2008

A recession is just a time when the business cycle takes a break. These occur about every 6 to 10 years. In theory, people should never be wiped out by a recession. In fact, if you have the ability to not lose your head when the economy goes south, you may even be able to put some money into your pocket.

Recessions do not have the same effect on all people. It you are fortunate enough to be someone who still has a relatively secure income, recessions can be a time of great opportunity. During recessions, companies are eager to find ways to move more of their goods. This means that buyers with money can find bargains on many big ticket items that they need. In turn, these savings translate into more capital that can be used to build wealth.

During a recession, good stocks are normally available for huge discounts. Most investors prefer to sit on the sidelines and watch the show. This lack of buyers drives down the stock prices. Those who are willing to buy stocks can increase their portfolios at huge savings. It is like buying clothes at a clearance sale. The merchandise you buy is new and cheap and decent quality which is a good combination.

If you can buy stock in a good solid company whose stock is taking a beating because of market unrest, consider it a bargain. Buy as much as you can afford if your broker does warn you about internal problems at the corporation. It will go up in a short time, and you can bank the profits. Many times in these cases, the stock will gain more than 50% in a matter of months. This is a nice return on investment in anyone's book.

Property can often be had at big reductions during a recession. Bankruptcies are up, unemployment is up, and money is tight. This is an excellent formula for the market to be flooded with cheap houses and other real estate. Buy it if you can. It is common during recessions for houses that need little or no work to be available for tens of thousands of dollars under market value.

Those who can buy these houses will make a killing within six months to two years. Recessions rarely last longer than 18 months. If you miss your chance to buy cheap, it might be several years before it makes another lap in your direction. If you have the cash, it may be worth the risk. Even if you choose not to resell these properties, using them for rentals could be a good plan. During a recession, many people may have lost their house and need a place rent.

For those in a strong financial position, a recession can be a good time to start a new business. Office and retail space can be rented at bargain prices because of businesses that failed as the recession deepened. This puts pressure on the property owners who may need the cash flow to keep up mortgage payments. They may be willing to rent them cheaper to keep from losing their property. Having lower cost floor space gives a well-capitalized start up room to wiggle during the early lean days.

Also, since some goods and services may not be available due to the poor economic conditions, the demand for what your new business offers could be quite high. A business that has a good location and the right product to offer can become profitable almost from day one.

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