Recessions are when asset prices reset, weak hands capitulate, and liquidity becomes king.
Savvy buyers have the opportunity to lock in decade-defining bargains.
This article was written by a Financial Horse Contributor.
How downturns turn fear into fortunes
Every recession looks different on the surface —dot-com collapse, GFC, pandemic, today’s stagflation angst— but the underlying mechanics are similar.
Forced sellers dump good assets to raise cash, business are forced to cut down and central banks pivot from tightening to easing.
Those with dry powder can buy franchises, property, or equity stakes at discounts.
That’s how new millionaires kept growing in 2024 even as headlines screamed slowdown.
Why ordinary investors still have an edge
Professional money is often trapped by mandates—index hugging, quarterly redemption risk, or leverage covenants.
Retail investors are free to do whatever they want with their money.
But a big mistake is trying to time it perfectly.
We’re not Warren Buffett, and even Berkshire doesn’t get it right every time.
Instead of trying to time the exact bottom, consider buying in tranches.
Dollar-cost averaging into broad ETFs or blue-chip names during a 25-40 % drawdown historically lifts 10-year CAGR above long-run averages.
Next, while having gunpowder is important, don’t just hold crash – make sure they are still getting some risk-free yield, while waiting for the right opportunities.
There will be passing economy slowdowns, full-blown recessions, and all sorts in between, if you are forever waiting for the “lowest” moment, you will miss out entirely on investing your money.
BTW – we share commentary on Singapore Investments every week, so do join our Telegram Channel (or Telegram Group), Facebook and Instagram to stay up to date!
Financial Horse also share great tips on Twitter.
Don’t forget to sign up for our free weekly newsletter too!
Playbook for the everyday investor
- Build war chest
Park living expenses in T-Bills or high-yield savings, while maintaining your investment portfolio. - Broad-based ETFs
Deploy funds into broad-based ETFs through some type of DCA approach – slow and steady.
E.g. purchase STI or S&P 500 ETFs every month. Bear-market boredom is your friend. - Add yield with discipline
Screen S-REITs or global dividend aristocrats yielding >150 bp above their five-year average; insist on <40 % gearing for REITs to avoid rights issues. - Look for distressed quality, not deep value traps
Blue-chip tech trading at <15× forward free-cash-flow or Grade-A commercial property selling below replacement cost beats a no-moat “cheap” stock every time. - Lock-in cheap leverage prudently.
MAS still caps first-home LTV at 75 % and TDSR at 55 %; if rates fall in 2026, refinancing can turbo-charge equity gains. - Use CPF and SRS
Mandatory CPF contributions compound at 2.5-4 % even in a recession.
Topping up SRS defers tax and lets you deploy into beaten-up equities without using after-tax cash.
Singapore investors
Property
Keep an eye on smaller developers with inventory overhang—price cuts typically precede policy relaxation by 3–6 months.
REITs
Yield spreads versus 10-year SGS bonds are the widest since 2020; history says a Fed easing cycle compresses that gap within 18 months, handing double-digit total returns.
Fixed income
If you crave stability, ladder SGS bond.
Should yields slip below 2%, switch incremental cash to bank fixed-deposit promos or money-market funds.
Risks & Uncertainties
Prolonged high real rates could turn a shallow recession into a balance-sheet crunch.
In general, risk management and position sizing go hand in hand, make sure your overall asset allocation as well keeps steady.
Bottom line
Recessions don’t hand out wealth indiscriminately—they transfer it from the impatient to the prepared.
Shore up cash flow, program your buys, and stay focused on value buys (not just cheap buys).
Remember to also respect the risks involved, and size your bets accordingly.