Navigating a recession requires an intelligent, fleet-footed strategy to safeguard your money and protect your financial future amid the downturn and uncertainty. Truth be told, no one, including the experts, knows how the economic slowdown amid the coronavirus pandemic is going to play out in the long run. That’s largely because we’ve never before had a global pandemic wreak havoc quite like this: conventions, vacations, sports seasons cancelled; restaurants, bars, major retailers closed; certain cities, counties, even countries on lockdown.
Here’s how to navigate a downturn or a recession:
Protecting Your Portfolio During a Recession
Of course, the time to protect your investments from a downturn is well before the downturn. Now may also be a good time to consider a permanent portfolio, which is a strategy meant to insulate against recessions.
The most basic strategies for protecting your portfolio are fairly simple. Avoid volatile sectors, increase your cash reserves and try to find passive streams of income.
Trading During a Recession
Some people, though, consider declining markets to be buying opportunities. If you do want to buy on the dips, you’ll need to know about limit orders, put options and trading after hours. The strategy of buying and selling based on the news can be profitable, but also risky. But try to avoid touching your 401(k).
Getting Professional Financial Help
Talking to a financial advisor can help you prepare for the worst during a recession. If the volatility in the markets is keeping you awake at night, it may be time to hire an investment advisor. Or to switch advisors. At Elite Tax Success, we can help you prepare for the worst during a recession. You can reach out to us for a free consultation.