Yes, You Should Invest During A Recession — If You’re Prepared
Economic news changes from day to day. It can even change from hour to hour. And it absolutely changes from source to source.
Stocks can be up and down and financial reports can be interpreted in different ways, depending on the person or agency processing the data. So it should come as no surprise that when it comes to predicting a recession, it seems there is no solid, prevailing consensus.
But it’s not necessarily the prediction that matters as much as the preparation an investor does to make sure he or she is ready for the next one. Because recessions come and go, historically every 3 to 4 years, according to Kiplinger.
So, as an investor, it’s best to understand the hallmarks of a recession, learn from the previous one, be prepared for the next one, and leverage any opportunities a future one may present.
A recession, categorized by two consecutive quarters of GDP contraction, is essentially always around the corner. The big question is how deep it will go and how long it will last. Our most recent recession, which settled in as a result of the COVID-19 pandemic, was brief but deep — affecting a number of sectors due to a near-total halt of everyday life for varying periods.
Our next one could look much different.
Deutsche Bank has made a bold prediction, going further than other financial outlets, in forecasting the impending arrival of a “major recession.” However, economists at Moody’s are reading a dip in GDP in a more optimistic tone in light of other financial figures — such as low unemployment and strong economic growth — that suggest GDP is not the “end all” when it comes to marking the onset of a recession.
Whether or not a recession is coming, and how deep or shallow it may be, is an exercise left to analysts. Whether investors are ready for a recession, from a financial perspective, is the exercise tasked for investors and their financial advisors.
If the market has shown investors anything, it’s that it can’t be timed. The market will do what it will do, which is why a disciplined, responsible approach is so critical for investors.
Investors who work with financial advisors should clearly outline their priorities, establish goals and disciplined habits, and seek diversification in an effort to insulate their portfolio as much as possible.
And then, prepare to move when opportunities arise.
Recessions are rife with investment opportunities, but they can only be leveraged with advanced planning and disciplined saving. An economic downturn represents the very principle that is so often chirped to encourage sound financial purchases — “buy low, sell high.” And during a recession, as the last two have shown investors, the marketplace is swimming with opportunities to do just that.
But, it all comes back to planning. Opportunities can’t be pursued if planning and saving didn’t precede them, a key takeaway for any investor looking to prepare for the next recession.
When that arrives is anyone’s guess. The sure thing is knowing it will.
Everyone’s needs are unique. Contact us so we can answer your questions and discuss your specific investment needs.