A new recession now seems almost inevitable. What can you do to protect your finances, assets, and future?
No matter how severe a new and less buoyant phase of the economic cycle could be painful for many. Even more so for those that haven’t acted fast enough to protect themselves and position their money to thrive.
The Odds Of A Recession In 2022
A new CNBC report shows that 80% of US adults believe we are headed into a recession this year. This mindset alone could well be enough to make it happen.
Chances are high that we are already in a recession. It just takes months or even several quarters for all of the data to be released to the public.
Analysts say that we’ve never seen gas prices spike like this, and not had a recession. Bank of America now says that we are heading into recession shock.
We’ve already been seeing declining performance among business and consumer loans and debt. Suggesting trouble is already brewing.
Recession Or Stagflation?
A recession is a period of economic downturn. Businesses lose growth. In turn we’ll probably see more layoffs and higher unemployment levels.
Often you’d expect prices to come down in a recession. Along with wages. However, right now we are also battling historic inflation. This may make a period of stagflation much more likely. Some fear this is worse.
Stagflation means that the economy is stagnant, and yet prices are out of control with inflation. Anticipated rate hikes by the Fed may just compound this.
What Not To Do With Your Money
Markets Insider has forecast this recession will drive down stocks in the S&P 500 by 11% this year. That’s a small drop. Though who wants to lose 11% of their money? We also know that once things start to implode that markets overcorrect. Which is why many saw their retirement and brokerage accounts wiped out virtually overnight in the last Great Recession
NFTs and other highly volatile, fun ‘investments’ are also likely to be heavily negatively affected.
Gold may sound like a great investment in a recession. Though it is already at record high peak prices. It doesn’t produce any income either. Similarly bonds are likely to severely underperform during stagflation, and still leave investors watching their wealth evaporate.
What’s Better For Recession Proofing Your Money?
To protect yourself from a recession you certainly want your money in something which provides protection from the downside, and a floor for losses. You also want additional sources of income. Especially passive income.
With stagflation, or even hyper inflation environment, you need growth to keep up with rising prices, and to offset the devaluation of your money.
Real estate seems to check all of these boxes. Right now there are opportunities for buying, selling and holding.
Those that don’t make these adjustments to their finances and portfolios fast enough will certainly be feeling the financial pain if analysts’ forecasts are correct.