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Fears about an impending recession have been mounting since inflation showed no signs of slowing down in 2023, and we have arrived at a point where most serious economists predict a recession in the United States. Moreover, a global recession is likely in the cards, although the effects will differ significantly from one region to the next.
Preparedness-minded people saw this coming — and many have embraced a lifestyle in which they’re always ready for worst-case scenarios.
Is it too late if you have not prepared for a recession yet? Not at all. You can take steps to weather the storm and preserve or expand your wealth even at five minutes to midnight. We’ll investigate the top five steps everyone should consider taking to prepare for a recession in this short guide.
Following market trends, developments in your industry and others, and staying up-to-date on economic indicators is an essential part of preparing for a recession. Proper preparedness always has an element of prediction, after all, and you can only make accurate predictions if you are familiar with the current state of affairs.
Putting all your eggs in one basket is never a safe bet, but that’s especially true during times of economic turmoil. This is an excellent time to evaluate your investments and assess risk exposure, ideally with a financial advisor.
Consider diversifying across asset classes — and look beyond stocks and bonds. Alternative ways to store health during a recession include real estate, cryptocurrency, government bonds and treasury securities, and gold and precious metals.
A self-directed IRA, also called a Gold IRA or Precious Metals IRA, is an interesting alternative to a traditional IRA. These retirement accounts allow you to hold physical gold and precious metals as part of your investment portfolio.
Numerous preparedness-minded individuals and serious investors are committed to holding gold and precious metals as part of their portfolios — even in times of economic strength. However, a Gold IRA is also an excellent way to recession-proof your assets.
Gold is called a safe-haven asset for good reason. While it’s unquestionably true that the value of gold and precious metals fluctuates significantly in the short term, and precious metals should not necessarily be considered liquid assets, gold and precious metals have demonstrated remarkable stability over the long term.
Gold IRAs are held in the custody of an approved custodian or trustee, as per IRA rules, but these physical assets remain an excellent way to hedge against inflation.
An upcoming recession is also an excellent time to critically evaluate your current sources of income and explore diversifying them. That is true not just for individuals living comfortable lives but also for middle-class families preparing for the future.
Strategies can include:
Recessions are a normal, albeit unpleasant, part of a healthy economy. It won’t last forever, but you may have to tighten your belt to get through times of economic turmoil more comfortably.
Cut expenses where you can, starting with areas where you can minimize spending without noticing much of a difference. It’s a good idea to divert more resources to your emergency fund during this time, because you may well need to depend on it at some point.
The time before a recession hits is universally frightening. Few people actively welcome the prospect of instability and financial distress, after all.
With the right steps, however, a recession can also become an opportunity. Will you be a winner or a loser? That largely depends on you. Taking proactive steps to recession-proof your life now gives you and your family the best chance to get through a recession comfortably.
The best-prepared people take all of the steps on this list, adapting to changes before they even happen.