5 Tips to Prepare for a Recession, Ep #143

Is it time to prepare for a recession? I predicted at the end of 2019 that one would be coming—and many argue that we are already deep in the trenches. But what is a recession? What indicates that we ARE in a recession? In this episode of Best in Wealth, I’ll share those indicators, what we can learn from past recessions, and 5 tips to prepare yourself and your family.[bctt tweet="In this episode of Best in Wealth I share 5 Tips to prepare for a recession. Don’t miss it! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""]Outline of This Episode[4:25] How I predicted a recession was coming[6:20] What is the definition of a recession?[7:03] What are the indicators of a recession?[10:07] What we can learn from past recessions[16:30] Recessions don’t need to be scary[17:40] 5 Tips to prepare for a recession[24:55] What did we accomplish while life was standing still?What IS a recession?The definition of a recession is a period of economic decline within a certain region such as the United States. There must also be at least two quarters of negative Gross Domestic Product (GDP). Technically speaking, we won’t know if we’re in a recession until the GDP reports for the 1st and 2nd quarter of 2020 come in. So what are the indicators of a recession?An increase in unemployment numbersA downturn in the stock marketA downturn in the housing marketNegative returns in GDPWe are slowly checking the boxes on all these indicators. Unemployment is past 20%. The stock market at its lowest was down -37.5% from its 52-week high. It’s projected that home sales will drop 35% in the 2nd quarter compared to the end of 2019. The GDP will be the final nail in the coffin, but it appears we are well on the way to our 16th recession.What we can learn from past recessionsThe question at the back of everyone’s minds is “Should I be afraid?”. The best way to answer that question is to look at statistics from past recessions.There have been 16 recessions since 1929The average recession lasts 16 months11 of 15 recessions end with your portfolio in positive territory after 2 years4 of the 15 recessions required holding your portfolio 3-5 years to see positive returnsOnly one recession—the great depression—required holding your portfolio for over 10 years to see a positive returnRecessions don’t need to be scary. The mass media wants us to believe they are so we make emotional decisions. Stocks WILL go down, but the WILL recover. So hold tight and don’t make emotional decisions.[bctt tweet="What can we learn from past recessions? Listen to this episode of Best in Wealth to find out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""]5 tips to prepare for a recessionI wanted to share 5 tips to help you prepare for a session. You don’t have to panic and make hasty decisions. Instead, this is what I recommend:Keep investing. The money you invest this year will have more growth potential than what you invested in 2019 because you’re buying in at lower values. Have any extra money on the sidelines? Put it to work!Don’t take your inflation adjustment. If you’re retired you typically take out 4% from your retirement plus a percentage for the rate of inflation. I recommend leaving the extra in your portfolio this year to extend its longevity.Build a spending plan. Put a budget in place and track your expenses so you use your money wisely. You’ll often be able to find extra money that was being wasted.Increase your emergency fund. I recommend having 3-6...