These are certainly not the best of times for most households. With inflation high, and the rate of unemployment hitting the rooftop, companies closing shop or downsizing; its increasingly difficult to figure out the best things to do with money that is fast losing its value.
During economic downturns, it can be suicidal to hold on to cash or keep assets in liquid form. This is because inflation tend to easily prey at capital in liquid form or one’s savings by the day.
Therefore, the best and smartest move is to invest your money in some worthwhile stocks that can generate regular income for you. And what are these stocks?
Consumer Stocks
In trying to figure out some of the lucrative areas to invest your money during an economic downturn like we are experiencing now, one needs to consider some factors, most importantly is companies with products that are in demand at all seasons.
For instance, investing in companies that deal in essential goods such as food, drinks and most household and personal care products, will be one of the wisest thing to do.
The good thing about investing in the stocks of these companies is that their products are always in demand. Even in economic downturn the products remain very relevant and are sought after. Consequently, the companies producing or selling these products are not likely to experience an appreciable drop in revenue. As a result, companies that trade in these essential products are known for their long history of success, and enjoy a sizeable share of the market. The demand elasticity of these products is thin. Regardless of what the prices are, people will still make their purchases.
Companies in Nigeria that fall into this category are: Nestle Plc, Cadbury, Friesland Campina WAMCO Nigeria Ltd, etc. These are all manufacturers of consumer staples, regularly found on our dining tables for healthy living. Some are producers of other daily use products like tooth paste, brushes, detergents, bathing soaps to name a few.
Most of these products are used on a daily basis and cannot be done without no matter the economic situation in the country. Therefore, investing in these companies products will guarantee steady inflow of income.
Healthcare Sector Stocks
Like consumer staple products, health care products are among the most essential staple services that we can’t survive without. People need medical services, medicines, at all times, regardless of the state of the economy. For instance, during the COVID-19 pandemic, many of the stocks in this sector received a boost.
Precious Metals
Gold and silver are typically resilient during market downturns. Investing in these precious metals could be quite rewarding because these metals are known to increase their value even in times of economic uncertainity. People buy and hold these metals because they are expensive to mine. And as more people buy and hold, they create scarcity and subsequently their value grows with time.
Government Bonds
Bonds are very low-risk investments.
They are usually backed by the government, bonds and provide a steady return that offsets the volatility of equity prices.
Given the minimal risk, bonds tend to outperform other investment types in a downturn. Not only do they provide a relatively safe investment, but also a steady income stream in the form of regular interest payments. They’re also highly liquid, meaning they can be bought and sold in the market quickly and easily.”