By Kevin Roberts
It’s no secret. It’s on everyone’s mind. And there’s no avoiding it.
There’s a downturn headed our way.
We’ve been fortunate enough to be a part of the longest bull market in U.S. history. But things are finally starting to slow down. It’s inevitable. After all, the market is cyclical. We’ve been through downturns before, and we’ll go through them again. The question is: Will you be ready?
Will you learn from past recessions? Or will you repeat the same costly mistakes?
The key to survival is preparation, having a plan, not getting caught off guard. Here are a few things you can do to get yourself ready.
Diversify Your Portfolio
You’ve heard it a thousand times, but that doesn’t make it any less important: don’t put all your eggs in one basket. This advice rings especially true with a downturn coming our way. By spreading out your investments, your “winners” are more likely to balance out your “losers.”
Diversify among stocks, bonds, mutual and index funds. Diversify among different sectors. Even consider diversifying in assets that perform differently than equities, such as real estate or bonds. The more you diversify, the safer you’ll be.
Diversify Your Income
When recessions hit, the job market becomes unstable. It’s a fact of life. You might think a layoff will never happen to you (after all, that only happens to other people), but the truth is, nobody is immune. That’s why it’s important to have a Plan B (and even a Plan C).
What are some alternative income streams you could create? Could you find a couple extra part-time gigs, working a few hours a week? Start your own business offering a service? Teach others a skill? The more income-generating tools you have at your disposal, the more security you’ll have.
Invest According To Your Age
If you’re 25 years old, you should not be investing like a 50-year-old (and vice versa). The further away you are from retirement, the more time you’ll have to recover from a downturn. This allows you to take on riskier investments. On the other hand, if you’re already retired or nearing retirement age, you should be focused on preservation rather than growth. If a high-risk investment goes awry late in life, you won’t have time to recover.
Don’t Withdraw Early
Whatever you do, don’t dip into your retirement savings prematurely. You should do everything possible to prevent this from happening, whether that be starting the aforementioned side gig, downsizing your house to reduce monthly expenses, or creating a larger emergency fund. Do whatever needs to be done to protect that retirement account.
Make A Plan
As much as we like to think we’re self-sufficient, we can’t pretend to be experts in everything. And when it comes to your financial future, pretending to be an expert can have devastating consequences.
There’s no shame in seeking professional guidance. In fact, it’s recommended. Because when a “market storm” hits, your ship will either weather the storm, or it will sink. The best way to prepare is to fill any leaks with a solid financial plan—something I’d be happy to help you create. If you’d like to schedule a free consultation meeting, send me an email at kevin@roberts-cpa.com or call my office at (502) 426-0000.
About Kevin
Kevin Roberts is a CPA and CFP® specializing in providing virtual CFO services to individuals, families, small businesses, and professionals in the medical, professional service, and restaurant industries. He has more than 20 years of experience in accounting and taxes, and more than seven years in the financial services industry. Regardless of the services he provides, Kevin strives to offer clients confidence knowing that their financial aspects are being addressed and monitored by professional and competent individuals. Based in Louisville, he works with individuals, families, and businesses throughout Kentucky. Learn more by connecting with Kevin on LinkedIn or emailing kevin@roberts-cpa.com.