I love reading, listening or watching headlines the media comes up with. I really love it when the headline draws you in to an article and the article you read barely resembles anything highlighted in the headline. That said, when a headline reads, "Markets fall on Looming Recession", it really gets your attention. Here are some thoughts to help you understand and make educated decisions about your money....recession or no recession.
The Media has a job and 95% of that job revolves around gaining viewership and selling advertising. Let's face it, there are very few things that get our emotions going more than money. So getting viewers to buy in to headlines with their emotions sells ad space.
Many of the these same economists, authors and media outlets have been shouting that there is a recession nearing for the last 5 or more years. If I were a weather man and the lead to my broadcast was a statement saying 'it's going to rain today' eventually I would be right. Are you going to stay inside all day because an 'expert' says it might rain? If you are staying inside and it's not raining how long are you going to sit there before you decide to go outside? If we've had sat out of the markets for the last few years because of an expert predicting a looming recession, what was our cost of sitting in cash over that time period?
There might be a recession this year....or next year.... or the next year. Fact is, eventually there will be a recession. This is why matching your money to your goals is important. If you are within a couple of years of needing some money there should be a conservative allocation for those dollars you see yourself needing in that time period. Even if you need some money in the next year or two, God willing, you will also need some money 10+ years down the road. In that case you still have a need for growth on some of those funds to keep pace with the increased prices on goods we purchase every day. Although diversifying does not guarantee against losses, it may help smooth out the bumps along the way and give you some comfort in knowing the funds you'll need to pay the bills in the next couple of years are in less risky assets.
Our job is not to predict when a recession or market downturn may or may not happen. Our job is to have a conversation with you about your comfort level with risk and possible losses in your portfolio if a recession comes. Then help you invest in a portfolio that matches your comfort level and the timeline you have for those investment dollars. This takes the guessing and predicting out of the equation and gives us more certainly in what returns will be over time allowing us to focus on what is needed to reach your financial goals.
Ok, now that I've bored you to death with market and economic talk, I just want to conclude by saying we are here to help you make sense of these things. If you have questions or concerns about your retirement or investments please contact us to set up a time to chat on the phone or meet face to face. We want to help you make educated decisions about your money that make sense for your personal situation.
Enjoy the day!
Keith