Unfortunately, the chances of another recession are increasing, largely due to the uncertainty set forth by the new administration. When uncertainty rises, we collectively tend to spend less and save more. As a result, corporate profit growth may slow, stock prices could fall, and layoffs may increase.<\/p>\n
Losing money in your investments and then your job is a double whammy nobody wants. That’s more like a depression. Many experienced this pain during the 2008 Global Financial Crisis, the first half of 2020 when COVID hit<\/a>, and now in 2025 with mass government worker layoffs. What\u2019s even tougher is that without active income, you also miss out on investing at bargain prices.<\/p>\n Nobody but short sellers or extremely wealthy people with ample cash want a recession. However, if another downturn is on the horizon, let’s focus on some surprising positives. Perhaps this perspective will help soften the blow of losing a boatload of money very quickly. <\/p>\n Recessions are a part of life. Live long enough, and you’ll experience several. The key is to accept them for what they are, seize the opportunities they present, and stay optimistic that better times are ahead.<\/p>\n Imagine a booming economy with a pro-growth administration. Friends are getting raises and promotions, and you feel compelled to grind harder to keep up. Meanwhile, the surging stock market encourages you to save and invest aggressively given the window of opportunity never lasts forever<\/a>. <\/p>\n In a recession, the opposite often happens. As layoffs increase and your portfolio declines, working harder may no longer yield better results. That raise and promotion simply aren’t going to happen. Since your company’s share price won\u2019t magically recover through your individual efforts, you may rationally decide to focus on your\u00a0Return on Effort<\/a> (ROE)\u00a0instead.<\/p>\n Instead of overextending yourself, you might decide to do just enough to avoid getting laid off. After all, the harder you work, the lower your ROE. This mental shift can free up time for rest, hobbies, and family\u2014potentially improving your mental health and happiness.<\/p>\n A bull market is tough for young adults and children because rising prices make investing feel out of reach. Conversely, a recession gives them an opportunity to invest at lower prices.<\/p>\n Most young people have minimal savings, meaning they aren’t losing much in a downturn. If they can earn and invest during a recession, they may build meaningful wealth in the years ahead.<\/p>\n During downturns, parents can gift and invest more for their children. They can also match any Roth IRA contributions<\/a> their children make. While they may not become millionaires before leaving home<\/a>, this latest correction increases their odds of children accumulating significant wealth by adulthood if they take action.<\/p>\n When the stock market tumbles, the richest people in the world tend to lose the most. For example, when Tesla stock corrected by 50%, Elon Musk\u2019s net worth dropped by over $130 billion. As a result, 99.9% of us became relatively wealthier compared to Elon.<\/p>\n As the wealth gap narrows, there\u2019s often less social unrest. When inequality shrinks, society can feel more stable and harmonious.<\/p>\n During a booming economy, popular destinations can feel unbearable. I was in Palisades, Lake Tahoe, one weekend in March, and the crowds were overwhelming. Daily lift tickets were $215 \u2013 $270, lodging ranged from $400 \u2013 $2,000 a night, and my wife almost got run over on the mountain a couple of times. A recession would reduce the number of visitors, making ski trips safer, cheaper and more enjoyable.<\/p>\n With fewer people working, rush hour traffic jams from 7:00 to 9:30 a.m. and 3:30 to 7:00 p.m. will start to ease. This reduction in congestion can lead to less road rage, lower stress levels, and fewer accidents \u2014 ultimately saving lives and money.<\/p>\n Theater shows like\u00a0Hamilton<\/em>\u00a0may no longer get away with charging $350 for upper-deck seats, and NBA games might become more affordable than $250 per ticket. Best of all, you might finally be able to book a reservation \u2014 or even just walk into \u2014 one of your favorite restaurants. Now that would be a welcome change!<\/p>\n A recession helps reduce the heavy consumption patterns of non-personal finance enthusiasts<\/a>, who don’t save aggressively for their futures. In turn, day-to-day life gets much better for the rest of us. <\/p>\n With more people unemployed, more childcare providers at a lower price become available. At the same time, as more parents stay home to save on childcare costs or due to layoffs, daycare spots become easier to secure.<\/p>\n If you\u2019re eyeing private schools for your children, competition may ease as families switch to public school or homeschool<\/a> to cut expenses. This can provide much-needed relief for parents navigating the admissions process<\/a>. More time at home raising your children might also mean better relationships with them in the future.<\/p>\n I remember the frustration of getting rejected by six out of seven preschools in San Francisco in 2019. Wealth created enormous demand for spots, and even so-called lottery-based admissions favored the rich and well-connected. A recession could restore some balance to these systems.<\/p>\n During a recession, the first things to hit the market are vacation homes<\/a>, luxury cars, watches, jewelry, boats, and other non-essential toys. If you’ve been eyeing any of these items, a flood of supply will likely drive prices down.<\/p>\n This is your chance to channel your inner vulture investor<\/a> \u2014 lowball distressed sellers who overextended themselves with debt. By seizing these opportunities, you can accumulate valuable assets and potentially enrich your family as the economy recovers. <\/p>\n Enormous fortunes have been made by savvy investors who bought distressed assets during the 2008 Global Financial Crisis<\/a> and the March 2020 downturn. Meanwhile, those who couldn’t hang on will likely never catch up to those who did. <\/p>\n Tough times often bring people closer together. Families may spend more time at home, bonding through game nights, cooking meals together, or enjoying simple activities like family walks. Communities may also become more tight-knit, with neighbors supporting one another.<\/p>\n The shared experience of navigating financial hardship can strengthen relationships, reminding us that wealth isn\u2019t the only path to fulfillment. Nothing is more important than friends and family. A recession might just shake us into remembering this truth.<\/p>\n If a recession is going to wipe out a chunk of your wealth, you might as well spend some of it and enjoy life! Watching your portfolio take a beating is one of the best ways to truly appreciate your money. It\u2019s like a near-death experience that makes you want to live life to the fullest.<\/p>\n The more money you lose, the more you’ll value what you still have\u2014your family, friends, health, wisdom, and, of course, your safer assets like cash, bonds, and real<\/a> estate that keep generating returns<\/a>.<\/p>\n Now let me leave you with the absolute greatest benefit of a recession. <\/p>\n Recessions have a way of pushing people to reevaluate their priorities. Over the years, many have used downturns as a catalyst to stop wasting time on things they don\u2019t enjoy. When the profit motive disappears<\/strong>,<\/em> all that\u2019s left is whether you genuinely find fulfillment in what you do.<\/p>\n If you\u2019re stuck doing something you hate, a recession can be the nudge you need to make a change. Rather than looking back with regret<\/a>, take this opportunity to pivot toward something more meaningful.<\/p>\n After losing 35%\u201340% of my net worth in just six months during the greatest recession of our lifetimes, I decided I had enough of working in finance. I plotted my escape by first entertaining a compelling offer from a competitor, which forced my existing firm to come close to matching it. Then, a year later, I came up with the idea of negotiating a severance package<\/a> so I could leave with money in my pocket.<\/p>\n If the Great Recession of 2008\u20132009 had never happened, I’m certain I’d still be stuck in the corporate meat grinder today. My health would certainly be worse, I’d be grumpier more often, and I wouldn’t get to spend nearly as much time with my kids as I do now because of all the work travel. Thank goodness a recession shook me out of the desire for constantly more money and status<\/a>!<\/p>\n When you\u2019re miserable enough, you will find a way to change. And if you don\u2019t, then maybe you\u2019re simply not miserable enough yet. In retrospect, losing more than a third of my net worth so quickly was a small price to pay for 13 years of freedom so far.<\/p>\n Nobody wants a recession. But if one occurs, focusing on its potential positives can help you stay grounded and hopeful. By adjusting your mindset and seizing new opportunities, you may emerge from a downturn stronger, wealthier, and more fulfilled.<\/p>\n As someone with about 28% of my net worth in stocks, I\u2019m certainly feeling the sting of this latest market correction. However, I\u2019m continuing to dollar-cost average into stocks<\/a> since I\u2019m aiming for a 30%\u201335% stock allocation. At the same time, I find comfort in owning a paid-off home and having roughly 50% of my net worth in real estate.<\/p>\n It’s kind of ironic, but all this uncertainty and chaos<\/a> is exactly what real estate investors have been hoping for. The decline in interest rates is a sight for our sore eyes after the relentless rate hikes since 2022. It\u2019s nice to finally see more capital rotate into real assets.<\/p>\n For these reasons, I can\u2019t say I\u2019d be entirely upset if we enter a mild<\/em> recession once more. Let\u2019s just hope things don\u2019t get too bad because losing a lot of money ultimately means losing a lot of time.<\/p>\n Readers, what are some other ways a recession could positively impact your life? Let\u2019s hear your thoughts as we navigate this period of falling stock prices \u2014 and for some of us, job losses too.<\/em><\/p>\n My favorite asset class to own during a recession is real estate. Investors gravitate toward the stability of real assets that provide utility and generate income. Unlike stocks, real estate valuations don’t just vanish overnight.<\/p>\n If you’re looking to invest in high-quality residential and industrial commercial real estate, consider Fundrise<\/a><\/strong> \u2014 my favorite private real estate investing platform. I’ve invested over $300,000 in Fundrise, and they’re also a long-time sponsor of Financial Samurai.<\/p>\nThe Great Things About A Recession<\/h2>\n
1) You May No Longer Need To Work As Hard<\/h3>\n
2) Young Adults and Children Have a Greater Chance of Building Wealth<\/h3>\n
3) Greater Relative Wealth for the Middle Class<\/h3>\n
![\"Probability](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/03\/recession-prob.png\")
4) Less Crowding and Traffic<\/h3>\n
5) Easier Access to Childcare and Schools<\/h3>\n
![\"Stock](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/03\/IMG_0192.jpg\")
<\/figure>\n6) More Deals on Luxury Items and Other Things You Don’t Need<\/h3>\n
7) Stronger Family Bonds and Community Support<\/h3>\n
![\"US](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/03\/recession-chance-2025.jpeg\")
8) More Encouraged to Spend and Enjoy Your Wealth <\/h3>\n
Greatest Benefit Of A Recession: The Courage To Change Your Life For The Better<\/h2>\n
Embracing the Silver Linings Of a Recession<\/h2>\n
Diversify Your Assets<\/h2>\n