Financial Planning

The Yield Curve Has Inverted–What Do You Do With That Information?

The yield curve has inverted, I’m sure you are aware of that by now, which has a strong track record of preceding (not predicting) a recession.  There are plenty of investment and market takes out there, but not many coming from the standpoint of a financial advisor. Traders, short term investors, and stock pickers have different goals and probably need to take different actions than the majority of us.

Most of us are long term investors–we’re planning for retirement, college, weddings, growing families, and other personal goals guided by financial plans; so let’s take a look at what this “event” means to our financial plans and what individuals should be thinking about:

If you’re concerned about the signal being sent today, here are some things to think about and/or discuss with your financial advisor:

  • If you are a retiree, is your portfolio constructed to maintain the ability to provide your monthly distributions if there is a recession or long-term market decline?
  • Are there purchases or trips that you might need to delay if a recession occurs?
  • Have any of your goals changed in the last day?
  • If you are a family that relies on the income of a salesperson who’s income is very dependent on a booming economy, do you have enough savings to cover a reduction in income?
  • Are there any other parts of your financial plan that you can control that need to be addressed?
  • Remember financial plans are not set in stone. They change, sometimes because our goals change and sometimes because of factors outside of our control.

For more about what exactly the inverted yield curve is, check these videos and Flash Briefings out:

Whiteboard Series: The Inverted Yield Curve 

The Rundown: The Inverted Yield Curve Is Back In The News

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