Getting rich in a depression …


I must admit, the only reason why I’m writing this post is because I happened to read Bill Shrink’s post with 16 Depression Era Money Saving Tips and saw this photo (under the tip: “buy in bulk”) …

… and, the only thing exciting about that is that I have an empty cup of that incredibly spicy ‘instant soup’ (the one in the photo with the Chinese character that looks like a black lantern on a pole) sitting on my desk in front of me, and my mouth is still burning! Yum …

While the tips themselves are sound, I was getting ready to give him a metaphorical pasting, when I saw that he actually did include an increasing-income tip, as well:

Develop Multiple Income Streams: it wasn’t called the Great Depression for nothing, but the gloom and doom we associate with it overshadows the fact that not everyone was hurting. Amidst all the mass suffering and despair, a small minority of people actually managed to thrive by diversifying and developing multiple income streams. You can do the same! Whether it’s investing (Warren Buffet says to be greedy when everyone else is fearful), starting a business, or picking up a second job, anything you can do to spread your risk across more than one thing will make you safer and more secure.

Of course, the aim is to get rich(er) quick(er) – so, that we can reach our Number – which leaves me to wonder, how do people actually get rich during a depression? Well, according to this forum – where this exact question was posted – you can get rich by:

– If you have money buy up assets at depressed values. The key is to have money during the depression. If you don’t then you are in a very tough position as jobs and business opportunities are scarce,

– Save all the money you can in good times, spend it in bad times

– Wait a few days, see if there are further losses and then put in a buy order

– Become a Beer distributor

– Make bras or get into entertainment

– My grandfather worked for a factory that made thread and other home sewing supplies and rode out the depression that way. I guess today it would still be cheaper to buy your threads at WalMart, but there must be other recession-proof businesses.

– In a recession people and companies repair what they have in Capital Equipment

– I knew a family that benefited from an ancestor who wisely saved his cash…and when the Great Depression hit, he bought land…and lots of it and at cheap prices.

– Funeral homes, toilet paper and trailer parks

… and, there are plenty more.

Look, when you buy into a rising market, the chances are that you are already too late … but, the same applies in a ‘depression’: by the time you read about it, it’s too late to panic, you’ve ALREADY been caught. So, it’s simply time to buck the trend and invest.

The opportunities to get rich for the ‘little guy’ are actually MUCH more prevalent in a down-market than in an upmarket: so, buy up assets (land, stocks) at depressed prices and hold for the long-term and/or buy into businesses that are always needed (i.e. the ‘boring ones’) … that’s pretty much all it takes πŸ™‚

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3 thoughts on “Getting rich in a depression …

  1. Agree – all good tips and I like the way you link bras to entertainment πŸ™‚

    I was taught at an early stage that the best time to make money was in a bear market. I think it was Lord Rothschild who first said that the best time to buy is when there is blood on the street.

    Slightly tongue in cheek, I’m tempted to as “what depression?”

    The answer depends on where you live. Out here in HK, most people still have jobs. Most people are still paying the mortgage, the school fees and eating out (restaurant takings were actually up in the first quarter of 2009). The brief opportunity to buy assets at (relatively) distressed prices has been and gone. The banks are drowning in liquidity they are so depsarate to lend out money that you can get mortgages at around 1% interest (floating rate).

    I’m begining to think that I am living in the wrong country if I want to take maximum advantage of the opportunities presented by the current downturn.

  2. @ TraineeInvestor – LOL, I wish I had said that, I’ve now put the “bras and entertainment” reference in quotes, where it belongs πŸ™‚

    We have similar ‘problems’ in Australia: a sharemarket that has crashed (and now rebounding) in line with the US, but property prices that REFUSE to follow πŸ™

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