Will a recession arrive in 2023, and how bad will it be?
The threat of recession has been hovering over the American economy since 2022, and it may arrive soon.1
How long will it last (and how bad will it get)?
When you're dreaming about (or seriously planning for) retirement, you may worry:
"Will I need to work longer, delaying my retirement dreams?"
"Will I have to downgrade my retirement lifestyle so my money lasts?"
Knowing what to do during and after a recession can help you keep your portfolio working towards your retirement date.
Losing money is a big fear during market declines, with good reason.
Logically, you know that bear markets and recessions come and go, but you still wonder where you should invest, whether you should sell out of the market, or if cash is "safer" than staying invested.
So what do you do next?
Fortunately, the market has been through tough times like these, and you can steal the secrets of those who've used recessions to grow their investments before you.
This personal recovery playbook is designed for hard-working savers just like you who are looking for a way to help recover from a recession.
You may be asking yourself questions like:
If any of these questions resonate with you, keep reading...
Volatile markets tend to make investors (especially pre-retirees!) uncomfortable, but remember that now is the time when opportunities are available at a discount! Volatile markets don't last forever — in fact, they average about nine and a half months in duration.2
You don't want to miss out on a sale, so you need to keep your eyes open and act fast.
You have the opportunity to:
Instead of focusing on losses, look for underpriced investments that can help you withstand market turmoil without giving up the growth your investments need for the long term. As Warren Buffett says, "Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."
Game-changing questions to ask yourself include:
When the next recession will arrive, how long it will last, and how long it will take to recover are all unknowable.
However, this doesn't mean your money is completely outside your control. You determine:
... and (barring unforeseen circumstances such as illness) you decide if:
But you may not need to change anything about your retirement dream, even during a recession if you take strategically timed action while you're working.
Game-changing questions to ask yourself include:
Selling off all your investments would be a serious mistake, though one that's easy to make when the market is tumultuous and your next play may not be obvious to you.
The problem is once you've fled to safety, it's hard to start investing again until the market starts rising, which means you're buying high. If you want to make the most of the growth potential of the stock market (and stocks are the asset class known to outpace inflation), you need to be invested.3
Turn off the financial news if you need to, and check your portfolio value less frequently so you're not tempted to sell your growth assets.
Game-changing questions to ask yourself include:
Depending on when you set up your investment plan, you may be a few years older and close to needing the money that you've invested. There are a number of ways that you can be more defensive and protect what you have, while still leaving enough money invested that you capitalize on the next recovery and bull markets that will materialize in the future.
You might consider:
While protection sounds good in theory, you do need to pay for it one way or another — in fees or in lower returns over time. Make sure you take the cost into account when you're thinking about safeguarding your money.
Game-changing questions to ask yourself include:
This probably isn't your first market dip, and it likely won't be your last. However, there is a wealth of wisdom available from those who have (collectively) invested for many years. They know what works and what doesn't. Many wealthy investors hire financial professionals with experience in chaotic times to help them make the right decisions for themselves and their families.
TV and social media are full of so-called experts and talking heads. You might have friends who report their portfolio moves to you in real time. Yet no one but you truly understands your personal situation. Their advice could be way off the mark and even result in you losing money. Instead, talk to a professional with knowledge and experience who can tailor their advice to fit the needs of you and your family.
Game-changing questions to ask yourself include:
You've already taken your first step towards creating a playbook that works, just by reading through this post. The next step is to schedule a 15 minute introductory call so you can run your recovery plays confidently.
Maybe you have experience with previous recessions, but you've never been through one so close to retirement and this time it feels different.
It's critical to plan your plays right now, so you're not caught off guard when the market changes. Otherwise, you might miss out on good opportunities or, worse yet, lock in your losses by selling when prices are low.
It's critical that you think like a wealthy investor so you benefit during both bull and bear markets. This can be hard to do, especially when you're close to retirement, so it's important that you leverage the knowledge of others.
Our team of professionals brings experience and practical steps to take during trying times. Take advantage of our knowledge and get started on building your 365 Retirement Plan today.
You need people on your side who not only have experience through all market cycles, but know how to apply it to your specific situation. We consult with you and take time to understand your goals and experiences to develop solutions.
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