Since about 2011, there has been several predictions about an impending recession in the United States. However, somehow the strong economy persists and now it has been over 10 years of economic growth. There are currently serious concerns and speculation of an upcoming recession. Here are three tips to help prepare for an impending recession.
Before we discuss the three tips, here are three premises that guided this tips.
1. No one can accurately predict when the recession will occur.
2. A recession might be very mild and short that most people might miss it as an investment opportunity.
3. No one buys an investment opportunity at its lowest AND sell at its highest.
Tips to Prepare for a recession
1. Shed debt: We are all anticipating a recession and we have been anticipating one for a long time, however, no one knows when it will come. Australia’s last recession was in 1991 i.e. 28 years ago. It’s prudent to shed debt. Instead of merely piling cash in order to deploy during an unpredictable recession, you can benefit from the reduction of your interest payments. As long as you plan on paying this debt off one day, there is no point waiting to risk the money you have today for a chance of making a higher rate of return just to pay more interest that have been accruing. Pay off your debt now.
2. Dollar Cost Average: This popular concept comes in very handy right now. The whole idea is to have a certain amount of money that you invest regularly and periodically, whether the market is high or low. Essentially, when there is a recession, you get to take advantage of buying assets and investments at a lower price, and when there is economic growth, you still get to participate in the growth. You are constantly participating in acquiring assets and investments regardless of the economic whims.
3. Save cash: Along with paying down debt and dollar cost averaging, you should also increase the amount of cash you are saving. Having some cash available to deploy if an incredible opportunity arrives is prudent. Perhaps you double the size of your emergency fund or triple it in order to use the excess to buy into an incredible investment opportunity.For more articles like this, please visit my website at www.victorlofinmakin.com/new-blog.
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