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How to recession-proof your investments
https://www.cnn.com/2020/02/26/success/recession-proof-investments/index.html
No one knows when the next financial downturn will hit, but everyone can take steps now to prepare for it.
With markets becoming more volatile this week, it's a good time to figure out if you're ready to weather an impending storm.
"Recession-proofing your portfolio and financial life is particularly important during a time like this, when everyone knows a recession will come eventually, but no one knows when," said Ben VerWys, senior financial adviser at Action Point Financial in Grand Rapids, Michigan.
While the economy is still strong and unemployment is still relatively low, it's a good opportunity to re-evaluate your goals, rebalance your portfolio and review your debt and cash levels.
Re-evaluate your goals
First, consider how many years away you are from needing to take distributions from your portfolio in retirement, said Jarodd White, financial planner with Vitalize Capital Management in Milwaukee. "The shorter your time horizon, the higher the need is to move assets from more volatile to less volatile strategies."
Next, consider whether you're taking on the right amount of risk.
You can stress test your current holdings in a variety of ways, but looking at how you may have fared in past downturns is a simple way to do it.
Brett N. Fry, a certified financial planner at Forteris Wealth Management in Dallas, said he shows his clients how their portfolio would have performed during past downturns, like the recession of 2008 or the bursting of the tech bubble in 2001.
"Often the investor says they could not stomach that sort of loss or volatility," he said. "Then we know their current portfolio is too risky and they should dial back."
Based on your financial goals, set out a plan for when you plan to withdraw your money and put it in writing.
No one knows when the next financial downturn will hit, but everyone can take steps now to prepare for it.
With markets becoming more volatile this week, it's a good time to figure out if you're ready to weather an impending storm.
"Recession-proofing your portfolio and financial life is particularly important during a time like this, when everyone knows a recession will come eventually, but no one knows when," said Ben VerWys, senior financial adviser at Action Point Financial in Grand Rapids, Michigan.
While the economy is still strong and unemployment is still relatively low, it's a good opportunity to re-evaluate your goals, rebalance your portfolio and review your debt and cash levels.
Re-evaluate your goals
First, consider how many years away you are from needing to take distributions from your portfolio in retirement, said Jarodd White, financial planner with Vitalize Capital Management in Milwaukee. "The shorter your time horizon, the higher the need is to move assets from more volatile to less volatile strategies."
Next, consider whether you're taking on the right amount of risk.
You can stress test your current holdings in a variety of ways, but looking at how you may have fared in past downturns is a simple way to do it.
Brett N. Fry, a certified financial planner at Forteris Wealth Management in Dallas, said he shows his clients how their portfolio would have performed during past downturns, like the recession of 2008 or the bursting of the tech bubble in 2001.
"Often the investor says they could not stomach that sort of loss or volatility," he said. "Then we know their current portfolio is too risky and they should dial back."
Based on your financial goals, set out a plan for when you plan to withdraw your money and put it in writing.
The president's supporters may be dumb enough to believe his lies but the rest of us would do well to reduce risk in investments and retirement plans.
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