An economic recession can damage your wealth as well as open up investment opportunities. Due to the monetary policy decisions of the Federal Reserve, which are aimed at stimulating the economy, interest rates tend to fall. This can encourage cheaper mortgage loans and possibly lower debt rates. However, this also means that the interest on bank deposits has fallen, which can reduce the savings income of depositors. At the same time, a lower stock price can hurt your investment portfolio — or offer a deal when buying stocks.
Recession is no man’s friend and it’s important to save for cases like this. But why save? Let’s have a little talk about the effects of recession and how HaggleX can help you save for a period of financial crisis.
What Is a Recession?
A recession is a period of reduced financial activity that lasts for several months. It’s hard to define when the recession will start or end, but economists tend to look at some statistics, including how many people work, how much money people make, the country’s industrial production, and the country’s gross domestic product (GDP) to the economy to determine the general start date of the recession.
Until recently, the US economy was in the longest growth phase in history — an 11-year growth phase that began in 2009. This expansion ended with the outbreak of the COVID-19 crisis. According to the National Bureau of Economic Research, the US economy entered a recession in February 2020.
In Nigeria, the price of crude oil has fallen due to the decline in global demand and measures to contain the spread of COVID-19. The Nigerian economy slipped into recession in 2020, reversing the three-year recovery. The containment measures mainly affect aviation, tourism, hotels, restaurants, manufacturing, and trade. The inflation rate rose from 11.4% in 2019 to 12.8% in 2020. This is due to the increase in food prices due to the limited domestic supply and the mark-ups on the exchange rate surcharges to around 24%.
You may wonder, what happens during a recession?
Economic recession is a normal feature of economic life. They are considered to be the result of a lack of aggregate demand, including consumer spending and doing business. Regardless of what happens to them, their effects are mostly predictable.
The Federal Reserve usually responds to economic recessions by lowering interest rates to increase consumer spending and lower the cost of loans on homes and cars. The idea is to reinvest investments in the economy.
Of course, the Fed’s efforts to cut rates will also lead banks to cut deposit rates. In other words, your savings can be reduced. However, the speed at which all of these parts will be implemented is difficult to predict — as is the exact start of a recession.
The Need to Save in a Recession
Undoubtedly, higher savings reserves imply that buyers have pads that can assist with engrossing overpowering costs without burrowing the opening further. But, having a higher portion of income allocated to savings means that living expenses are lower–and you may need to adjust your budgets to spend a larger chunk of income on increased mortgage payments or better compensate if they lose their jobs.
That capacity to adapt to financial hardship eventually implies that the economy recuperates a lot quicker. All things considered, when the bills are being paid, the banks, utilities, and supermarkets can keep their entryways open–and their laborers utilized.
Saying this doesn’t imply that savings are without risks. Any individual who held stocks in their retirement accounts at the start of the Great Recession–in October 2008–can bear witness to that. Even government intervention can work against those who save; stimulus spending and increased inflation can both work against the power of cash savings.
When a government provides an economic stimulus package to its citizens, it typically finances those expenses through additional sovereign debt, which will eventually have to be paid off by future generations. From one perspective, this means that savers are forced to bail out non-savers at some point in the future. Simply printing more money is another way that governments may pay for legislation that includes a federal stimulus. When this happens, there’s a higher risk of inflation. Inflation can be said to be the number-one killer of savings.
With inflation, every dollar in your savings account has less real purchasing power. Purchasing power is the worth of cash expressed in terms of the number of goods or services that one unit of money can buy. When there are high rates of inflation, one unit of cash, for instance, one U.S. dollar is not capable of purchasing the same amount of goods as in a prior period.
While the risks of inflation are real, when there are high rates of personal savings, there is less need for government stimulus. This is because the nation’s finances are shored up at the consumer level. As with most economic crises, the national savings rate shot up in the aftermath of the Great Recession. This trend was likely partially the result of those people who could afford to save deciding to stash their cash in anticipation of tougher times ahead.
These risks are one major reason why a lot of people are saving in crypto today to hedge against inflation.
Why Save in Crypto?
Saving in crypto is sounding like a viable option for most people today. A cryptocurrency savings account works like it sounds like it would. With this type of account, you can deposit your cryptocurrency and earn a standard rate of return over time.
The purpose of cryptocurrency savings accounts is to help investors earn money on their assets while they hold them. However, there’s one thing to consider when saving in crypto.
The first thing to know about cryptocurrency savings accounts, which you probably know already, is that cryptocurrency, in general, can be incredibly volatile. Since you’re investing with cryptocurrency and your returns will also be in cryptocurrency in most cases, there’s a chance your initial investment and returns will be wiped out if the value of your asset drops.
Introducing Crypto Save
HaggleX offers its users the opportunity to save in crypto. With the HaggleX app, you can earn up to 21% interest when you save your Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), USDT, or HaggleX Coin (HAG). There are two types of savings plans on the HaggleX app.
- Flexible Savings: This plan allows you to set up an automated plan where you can save your crypto asset daily, weekly, or monthly. There are no interest rates with the Flexible Savings plan. You can also cancel your savings plan at any time with a charge of 5%.
- Fixed Savings: This plan allows you to save and earn up to 21% annual percentage yield (APY) on your crypto asset. You can choose to save for 3 months, 6 months, or for 12 months. However, unlike the Flexible Savings plan, you cannot stop your savings plan until the duration for saving is completed.
How to Save with the HaggleX App
You can start saving with the HaggleX app with the following simple steps.
● Download the HaggleX app and create an account
● Verify your email and complete your KYC verification
● Click on the “CryptoSave” tab
● Chose which Savings Plan you will want to proceed with
● Choose which digital assets you want to save
● Create a name for your savings plan and a little description
● Fill in the necessary details needed including how much you want to save and for how long.
● Click on the proceed button and you’re good to go. You can add funds to your savings account.
HaggleX Save and Win Promo
HaggleX has developed a savings promo to encourage users to save in crypto. You stand a chance to win $2000 when you save in crypto with the HaggleX app.
This promo will allow users to save as little as $10 worth of any crypto on HaggleX wallet. Each week, one customer will be picked at random to win $100. At the end of every 4 months, 1 winner with a minimum of $1000 will be picked to win $1000.
To win $2000, all you have to do is save as little as $10 in any of the listed coins in your HaggleX savings account. Maintain a minimum of $200 minimum for 12 months to qualify to win $2000.
Winners of the HaggleX Save and Win Promo will be announced via our social media handles.
Conclusion
One of the biggest risks consumers face during a recession is a loss of income. Unfortunately, there is no way to predict whether you’ll lose your job or if your income will otherwise be impacted by an economic downturn. By saving in crypto, you can protect yourself from financial crises. Save with HaggleX today and not just save for the future, but also stand a chance to win more money.
Download the HaggleX app on your Google Play Store or Apple Store for free.
Google Play Store: https://play.google.com/store/apps/details?id=com.hagglex.hagglex
Apple Store: https://apps.apple.com/ng/app/hagglex-buy-sell-btc-and-eth/id1535046179
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