Are We Headed for a Recession? Here’s What You Need to Know and How to Invest Accordingly
Turn on the nightly news any day of the week. Flip through your local newspaper or favorite finance magazine. No matter the season, the question is the same: are we headed for a recession?
The truth is, nobody can predict precisely when the next recession will strike. But when they occur, they can be detrimental, with the average length of them lasting 11 months– and the long-term consequences lingering for several months or years.
So, how can you protect yourself and your wealth accordingly? Let’s dig in.
Build Up Your Savings
No matter if (or when) the next recession occurs, cash is king. For example, you could lose your job and become behind on mortgage payments. That’s why it’s imperative to have savings on hand.
Most experts recommend saving at least six months’ worth of expenses. If you have a family, you might want to stretch that to up to a year. Your savings should account for housing, utilities, basic necessities, and any financial obligations.
Remember that your savings are to be used in true emergencies. Having savings doesn’t do you any good if you keep spending that money!
Diversify Your Portfolio
It’s always wise to consider diversifying your assets- both in healthy and unhealthy economic times. The premise here is simple. If all your eggs lie in one financial basket, what happens if that basket collapses?
There are many theories for how you should diversify your portfolio, but you will want to consider the following factors:
- a healthy mix of aggressive stocks with conservative bonds
- exchange-traded funds (ETFs) and mutual funds with varying rates of return
- real estate
Many investors also prefer the diversified benefits provided by options like commodities, cryptocurrency, loan stocks, startup options, and venture capital.
Cultivate Your Professional Worth
Employment concerns are one of the most significant detriments in a recession. In the last recession, more than 8 million Americans lost their jobs.
In a recession, it isn’t a matter of just finding another job. Many professionals were out of work for several months or even years. Many more found themselves underemployed. In that sense, they were working, but their job descriptions and income were lower than their skillset.
In general, no matter the financial horizon, you should be cultivating your professional image. Don’t get lazy on the job. Continue to build and foster relationships with your professional network.
Most of all? Continue adding to your education. Stay abreast of certifications and workshops.
You may also want to consider the merits of adding a side hustle. This will help diversify your employment, and it will diversify the funds you accrue.
Are We Headed For A Recession?
Ask ten different financial experts, and you’ll get ten different answers. Are we headed for a recession isn’t the main question. How are you prepared to deal with it is.
Are you interested in securing your wealth without all the legwork? Stock loans might be the perfect solution for helping you access your capital when you need it most. Contact us today to learn more.