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5 Considerations For Your Portfolio During a Recession

5 Considerations For Your Portfolio During a Recession

January 21, 2023

Recessions have been a part of economic history for centuries. The earliest recorded
recession occurred during the Roman Empire in AD 37-41, when Emperor Caligula's
extravagant spending and subsequent economic policies led to inflation and a decline in
the economy.

Throughout history, recessions have been caused by a variety of factors, including war,
natural disasters, and financial crises. In more recent history, the Great Recession of
2008-2009 was caused by the collapse of the housing market and the subsequent failure
of several large financial institutions.

While recessions can be difficult for individuals and businesses, there are several
considerations to keep in mind when it comes to staying invested during a downturn in
the economy.

1. Diversify your investments: Rather than putting all of your money into one stock
or sector, spread your investments across multiple assets such as stocks, bonds,
and real estate. This helps to reduce your overall risk and increase your chances
of weathering a recession.

2. Don't try to time the market: It's impossible to predict when a recession will
occur, so trying to time the market by selling or buying at the "right" time is a
risky strategy. Instead, focus on long-term investment strategies that will help
you weather any downturns.

3. Be prepared for volatility: Recessions often bring increased market volatility, so
it's important to have a well-thought-out investment strategy in place before a
recession hits. This will help you stay calm and make rational decisions during
times of uncertainty.

4. Keep an eye on interest rates: During a recession, interest rates tend to be low,
which can be beneficial for investors. It's important to monitor interest rate trends
and consider how they may affect your investments.

5. Be patient: Recessions can be a difficult time for investors, but it's important to
remember that the economy will eventually recover. Be patient and stick to your
investment strategy, and you'll be in a better position to weather the storm and
come out ahead in the long run.

In conclusion, recessions are an inevitable part of the economic cycle, and it is important to be prepared for them. By diversifying your investments, not trying to time the market, being prepared for volatility, keeping an eye on interest rates, and being patient, you can stay invested during a recession and come out on top in the long run. It is important to understand that recessions can happen at any time and it's essential to be prepared for them. By having a well-diversified portfolio that is designed to weather a recession, you can minimize the impact of a downturn on your investments. 

If you are uncertain about your portfolio's ability to weather a recession, take me up on a complimentary portfolio review to ensure that your investments, whether in a 401K, IRA, ROTH, or brokerage account are ready to weather a recession. There is no cost to this review - I just want to be helpful.

CLICK HERE to schedule your complimentary portfolio review with me.

CLICK HERE to download my free e-book, "9 Investment Mistakes to Avoid During a Recession."