A downturn is upon us, but winners will always emerge. Here’s how you can be one of them
Winners know that recessions are not something to fear but are rather opportunities for those who are properly prepared. Even after the current economic situation passes, plenty of people will still emerge as winners.
Most experts think the NZ economy is probably heading for a recession. In fact, it could be the Kiwi economy is already technically in the midst of a recession. Prices of food and other essential goods have rapidly risen, mortgage repayments are rising with interest rate increases, and in many parts of the country house prices are falling.
Despite this backdrop, winners will soon rise. Below are the top six characteristics of winners during such a time:
1. Positive, Energetic, and Innovative People
Winners will do what it takes to ethically increase and solidify their income and protect what they’ve built so far. This includes taking on other income opportunities to increase their monthly income, then invest the extra funds – including investing in themselves through professional development courses and qualifications.
Sometimes, it might be hard to watch the news and feel a sense of optimism. War in Europe, inflation, recession, the global pandemic, global warming, and other issues all dominate the headlines. There are no easy solutions to these issues, however, winners have a purpose and stay focussed on solutions.
Winners take action, even if that’s just staying the course. Winners won’t be waiting for the situation to change, waiting for handouts, or waiting for help from anyone else.
2. Cash Holders Who Are Willing to Put It to Work
Those who leave large sums in the bank are set for more punishment as interest rates (though higher than they have been in recent years), are still likely to stay well behind the rate of inflation, which is even higher still. Even before recent events you might have heard us say that cash is trash.
Share markets (stocks) and the NZ property market have fluctuated and fallen over much of this calendar year. Smart investors with some cash to spare can win by investing more at times like these. Investing right now could be thought of as a necessary shopping trip when everything you need is on sale. This might take the form of:
Investing a lump sum or regular surplus into the share market (either directly or through funds). The world’s wealthiest people have been investing more than usual, and for personal investors the exact same theory can apply
Property investors and first home buyers who can make the most of the combined dip in values and record low interest rates
When more normal conditions return, savvy investors will be left with sizable gains.
3. Those With a Win-Win Mindset
Winners know that perspective and mindset is everything. The difference between a winning and losing mindset can be small, but it's distinct and is incredibly important.
Does winning mean someone else has to lose?
Despite what some people think, true winners don’t take a “win at all costs” approach. Winning at all costs isn’t winning – that’s usually just cheating or scamming people, and at its worst is breaking the law.
Consider a used car salesperson who sells cars hiding serious mechanical issues. Over the long run, this will lead to complaints, bad online reviews, and legal action. This will soon lead to the downfall of the dodgy salesperson – certainly not a win.
Instead, part of the winning mindset is how winners look for win-win arrangements – the idea that all parties in any situation can end up with favourable outcomes.
4. People Who Stoke Their Own Resilience
Sure, the world can beat us all down sometimes.
Resilience (or resiliency) is our ability to adapt and bounce back when things don't go as planned. Resilient people don't wallow or dwell on failures or about seemingly bad situations; they acknowledge the situation, learn from any mistakes they’ve made, and then move forward.
According to the research of leading psychologist, Susan Kobasa, there are three elements that are essential to resilience:
Resilient people spend their time and energy focusing on situations and events that they have control over. Because they put their efforts where they can have the most impact, they feel empowered and confident. Those who spend time worrying about uncontrollable events can often feel lost, helpless, and powerless to take action.
Resilient people view a difficulty as a challenge, not as a paralysing event. They look at their failures and mistakes as lessons to be learned from, and as opportunities for growth. They don't view them as a negative reflection on their abilities or self-worth.
Resilient people are committed to their lives and their goals, and they have a compelling reason to get out of bed in the morning. Commitment isn't just restricted to their work – they commit to their relationships, their friendships, the causes they care about, and their religious or spiritual beliefs.
5. Those With a Well-Developed Plan
“An idiot with a plan can beat a genius without a plan” – billionaire investor Warren Buffett
Winners are fixated on where they want to be, and the practical steps they’re taking to get there.
As Warren Buffet suggests in the quote above, having and sticking with a plan could be the single most important thing on this whole list. This is so important it’s closely related to the only guaranteed way to get rich.
When troubling times hit, people with a deliberate and carefully prepared plan usually sail straight through the storm. They have already considered and planned for the inevitable storms that life will throw at us all. They might not have known a war would start or inflation was going to return so rapidly, but they have read a history book or two so know that natural disasters, wars, famine, recessions, and other issues are normal events that occur over the course of a lifetime.
This means they’ve probably already taken any number of deliberate steps to ensure they ride out the trouble, and not only that, make the most of a bad situation.
6. The Disciplined
During uncertain times, discipline is more important than ever.
Disciplined people have established routines, keep a level head, and can avoid distractions related to the current economic situation, the still-running pandemic, and the war in Europe. While others might be making common mistakes in a downturn, instead, disciplined people know what they want and are able to stick to their long-term proven techniques and plan to get it (or keep it!).
Without downplaying the very real human impacts of the Russo-Ukrainian war and the pandemic, along with the financial impacts on many households as inflation is spiking, those with discipline will be winning by staying calm and staying the course. For instance, even when further investment market turbulence occurs – which is quite possible – people with discipline will keep their cool and stay in control.
The Bottom Line – Who Wins in a Recession?
If you stay focused on developing and sustaining the characteristics on the list above, then you should soon emerge from the current downturn in a much better position.
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