Photo Credit: Jason Leung
Hello fellow Off-Grid Investors!
I have been busy taking care of family (health reasons) while studying for my securities advisory license (series 65).
As part of the Off-Grid agenda my goal is to provide professional investment lifestyle advice to clients in addition to being an access point to a wide variety of investment opportunities.
Let’s get into the topic at hand…RECESSION
What is it?
A recession is simply defined as a decline in economic activity. The global economy is a machine and any stop or stall can have major consequences that affect us all worldwide.
An economy is divided into 4 stages called the business cycle.
The 4 stages of the business cycle are:
Expansion- period of growth
Peak- when the growth hits the highest point
Contraction- a recession happens to stop or slow growth down
Trough- the lowest point of economy before growth restarts
Obviously, we are in the 3rd stage of the business cycle, the contraction. We have a ways to go down before we hit the trough period of the business cycle.
During my daily research into economic realities we are currently facing (and will continue to face), I have discovered a few things.
A Few Notes…
With the threat of a deeper recession coming into focus, personal income is at jeopardy, especially due to workplace uncertainty.
To put it plainly, employers have to go lean on spending in order to stay afloat.
Though very unfortunate, their measures will involve:
cutting back on spending
hiring freezes and layoffs
potential bankruptcy & mergers
As they say in business, “ish rolls downhill”. And it is the people who are usually on the receiving end.
One of the biggest problems we are facing, that began in the UK & EU this summer, is the rise of the cost of living.
How Much To Be You?
Cost of living is the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare.
The cost of living, according to the recent CPI measure is 7.7-8% in the US and 10% in the UK. This rise may seem small but imagine as prices of basic needs and wants go up, your wages & salaries didn’t follow.
With this number in mind, it is a good idea to calculate your real income growth (RIG) to see if you can still afford what you desire and need to live. This applies to those that have supposedly received an increased since the pandemic.
There are several ways to calculate your real income growth. But for the sake of keeping it simple we will use this strategy. Take the percentage of the current increase in inflation and subtract it from your income increase, and you will get the real income percentage of your money.
Example
If inflation is 8 % and your income rose 5%. When you subtract your income, your money is actually down 3%.
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How Low Will They Go?
Another thing I have noticed when looking at charts and rumblings from the Federal Reserve System, is we might be headed for a reversal in price levels for goods and services, or deflation as it’s called.
Lower prices sound good, but the question is how low will they go? Some economists and Wall Street pundits believe prices beginning in Q3 2023 will fall by a significant 20% for basic essentials, while others think we will see a 10% decline across all product types.
On the surface lower prices sound good about now since we are all paying more to live. But ask yourself, do I have enough cash to take advantage of lower prices for the items I buy and services I use?
Also, if prices drop too low to fast then this will affect employment. If an employer is not making enough money to justify their current level of staff, then they have to layoff more.
On the other side, lower prices are opportunities for those who are prepared.
Prepardness in a low price economy consist of:
having a savings in case you hit tough times
having dry powder (money designated for investing) on hand
having access to cash flow so your lifestyle won’t miss a beat
These are things that are not easy for everyone to obtain. But that doesn’t mean you shouldn’t go after it!
On a Personal Note…
Now is the perfect time to get ready for what’s to come. Personally, I am currently focused on :
Up-skilling because skills make money
I am getting ready for cheaper deals on assets
I am currently writing my 4th book
I am exploring more opportunities for success
My question to you is, what are your plans? Feel free to comment below or email me at info@hipturist.com. We will not share your name or location.
Until next time,
Off-Grid Investor
Disclaimer: All posts on the Off-Grid Income newsletter should be treated as educational content, and not financial recommendations of any kind. Before purchasing securities you should consult with a financial expert to see if it’s a good fit for your portfolio based off of your financial situation.