How To Profit From A Stock Market Crash When Investing | Beginner’s Guide

So the world is going crazy. I’m talking countries in lockdown, schools shutting, people panicking. The story is the same every time there’s a global crisis.

Most people panic, they’re all over the place. Smart people take advantage of the situation. That’s why these strategies will work whenever there is fear and panic around.

So today I’m going to be running through how you can make millions from the coronavirus market crash and any recession-causing crisis in the future.

By having the right finances in place, I was able to ride out the last two recessions and grow my business back to full strength in an incredibly short amount of time. Before implementing anything, make sure to speak to a financial advisor about your individual situations.

Let’s first break down what the market crash is and why it’s happening. Our economy has seen incredible growth over the last decade. It is been up, up, up, but now recently it’s come to an end and it’s started to crash.

Now, when companies are making more money it of course, creates more demand for jobs. And when more people have jobs, they earn more money.

Now this chain of events is extremely delicate. If just one link breaks, such as people not spending money then the whole system, it just collapses around us. We are currently seeing a chain of events breakdown on a huge scale, partly because of the virus but mainly because of the mass fear caused by the media.

It’s not the end of the world like the media would like you to believe. Their main aim is to get more people watching and reading the news as they can make more money from advertising revenue that they depend on.

On top of this there are huge disruption problems to supply chains, especially people like Apple and Amazon who depend on all of these items coming from China.

It causes a trickle down effect. This is why you may have seen bare shelves in the shop and people even fighting over toilet rolls. Who would have ever thought that?

Lots of investors see this unfolding and start to panic. They sell off stocks and shares. Now the biggest takeaway from this is that fear is the number one enemy of the stock market.

But you know what? It could be your number one friend. In situations like these, you have to adapt just like a virus. Look for the opportunity and don’t become paralyzed or over analyze everything. Be smart and take action. Even if it’s not perfect, just take that action.

Number one, reduce your spending and build a safety fund. Be unbelievably stingy, put it all towards building a safety fund. If you don’t already have one it’s the most important thing you need to do.

This safety fund should consist of three to five months of your living expenses. And only use in an absolute emergency. Now this safety fund is like your protective shield.

You can hold it up, hold it against everything, it’s going to protect you. Against unexpectedly getting fired or if you have a slow month with your own business. But most importantly fear won’t affect you in the same way.

Number two, index funds. Now you have your safety fund, you can afford to invest the extra money that you have coming in into an index fund. These funds are one of the safest long-term investment strategies you can take advantage of.

Now index funds are comprised of lots of different companies. Therefore they can go up or down with the market. Because people are currently scared, the market has dropped in value dramatically.

Now my prediction is the market will be worth a lot more money in a year from now. If things start to improve with the current situation and people start getting better, then it will kick start the chain of events and the market will bounce back dramatically. I wouldn’t recommend this strategy to anyone that isn’t prepared to invest for at least five years.

Now, one of the most popular index funds is called the S&P 500. This is comprised of the biggest 500 companies in the USA such as Apple and Amazon and Microsoft.

Now, the amazing thing is that buying and holding this fund for a 20 year period has never lost anyone any money. Just let that sink in, over a 20 year period it has never produced a negative result.

So come on, I hear you say. How do I get started? Now, I love using Vanguard index funds. You can just jump in their website, it’s really easy. Open an account. You can pick your own risk tolerance.

Now general rule here is the older you are, the less risk you should take. Don’t be put off by the complicated words. Do some extra research around what funds are best for you and start investing consistently each month.

The same amount, just keep invested. If you can make it automated, then even better. Like the saying says the best time to plant a tree was last year but the second best is to do it today and get going.

The main thing to remember is don’t panic when your investment goes down. Don’t even look at it because if you leave it there for long enough, you’re going to make a profit. Now, obviously I don’t have time to go through my exact investing strategies.

Number three, selling shovels. There are two different types of entrepreneurs. Number one, the gold miner. These are the entrepreneurs that go out search for the money.

They work hard and tirelessly. Sometimes making nothing at all. And other times, being very, very successful. This is the type I am in my everyday work.

I look for gaps in the market and then go sourcing for that item. Hoping that when I’m at a show in Asia I will spot that nugget of gold and be able to tie up an exclusive deal and supply that product to as many people as I can.

The second is the shovel seller. These are the entrepreneurs that supply the tools that the miners need to make money. It doesn’t even matter if the gold miners find the gold because everyone’s looking for it and they need the tools to do it.

This is important because the current crisis is causing the demand to shift and opportunities are being created in other areas. Just think about the coronavirus outbreak. People are having to self isolate, causing a demand for virtual technology that allows people to work from home to skyrocket.

Even school’s are turning to online streaming services, to teach their students. So as soon as you can start creating and selling products which allow businesses to continue mining for money despite this crisis, then you’ll be onto a winner.

Now you may be thinking that all sounds good during a crisis but what happens when everything goes back to normal? Well, the truth is that even after all this is over you will have the greatest sales pitch in the world.

You know, I could go into many companies these have been caught off guard by the coronavirus show them my product and tell them that this product can safeguard them in the future, should we have another crisis.

Remember, fear is a fantastic motivator. It’s the sole reason why insurance companies can exist. They insure against your fear of your loss. Without that there wouldn’t be any need for them.

Number four is investing in real estate. If you have excess cash then you should consider investing in real estate.

This is a long-term strategy. People don’t often buy houses and then sell them straight away. So I wouldn’t worry too much if your house was to lose a little bit of value say over the first six month period.

By buying in a recession when things are less expensive and interest rates are low, over a 10 to 15 year period you will see a dramatic return on your investment.

The trick here is to buy low and if the market is down, you can squeeze that price. You only have to wait for the seller to say yes to your offer.

If they say no, you’ve lost nothing. The key to a good negotiation on real estate is to take your own emotion out of the situation. And with the current situation, really, people are desperate to sell.

And remember in a recession or crisis, your cash in your pocket is worth 10 X. Just as Grant Cardone would say. So here we are, the big one.

Number five, buying individual stock. Now, as you’ve probably guessed, I’ve left this, the most risky option, until last. I’m not usually too keen on buying individual stocks as there is potential to lose a lot of money.

However, if you can predict the market is going to do the correct thing, then there are huge amounts for you to earn. Should I say huge? They are monster rewards to be had.

I invested in individual shares a few years ago, but only with the money I could afford to lose, which is a really good way to keep basically your money in check.

I selected three or four different shares I thought would do well. And as my luck would have it, I really did well in two of these shares. They went through the roof and ended up increasing 14 times plus at one point.

My general rule on investing in individual stock is when everyone is panicking and selling, it’s time to buy. But on the flip side, when your Uber driver or your hairdresser is telling you how much they’re buying, then you sell.

But how do you know what stocks to buy? When people aren’t flying buy airline stock. When restaurants are empty, buy restaurant stocks.

And when the movie theaters are empty buy movie theater stocks, it’s pretty simple. Ride that wave until you see the signs of others getting in and getting too confident, then sell.

So remember huge disruption to the economy causes a lot of pain, but it also brings massive opportunities for those that are prepared to take action.

Keep the faith. Remember when it all gets going again, your competition will be playing catch up. This is your golden time for growing your personal wealth and your investments.

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