Just a few weeks ago we were all fearing the next recession; it was code red–recession imminent. The yield curve had inverted, global growth was slowing, the U.S. and China feud seemed to be going nowhere, and the Fed was definitely not doing QE. The headlines and media were certain the next recession was upon us.
Things sure have changed in a short time.
We’re hitting all-time highs in the markets. Value and small-cap stocks are making a comeback, the U.S. and China are discussing rolling back tariffs, the Fed is cutting rates, and U.S. GDP continues to maintain. All is well and the red flag has been replaced with the all-clear green, which means it’s the perfect time to remember those nervous feelings from a few weeks ago and address the next recession, because there will be another, and make sure your financial plan is recession-ready.
Young Professionals Were Concerned
When recession worries were on high, I had a number of young professional clients ask what they should be doing to prepare for a recession. At first, I was surprised to get questions from my younger clients, but then I realized this would be the first time they’d experience a recession with skin in the game–they were still in college or earlier in their careers in 2008. Now they have families, good incomes, and investments–now there’s something to “lose”.
I decided to record what I’ve been telling them to consider and what we should address with their financial plans:
- How sensitive is your employment and income to an economic slowdown?
- Should you keep more cash on hand?
- What expenses can you push out, if you had to until things get better?
- Are your investments in line with your time horizon?
Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining to your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimers page