Brian Allen | getty images
The threat of a recession amid higher interest rates, banking turmoil and layoffs has weighed heavily on the minds of many investors. But according to financial advisors, you should still try to avoid reactive investing moves.
According to a recent CNBC survey, public pessimism about the economy has recently reached a new high. Nearly two-thirds of Americans believe the country is approaching or already in recession.
Although you may be eager to protect assets from a potential economic downturn, advisors say it’s important to stick to a plan based on risk tolerance and goals.
“It’s a mistake to constantly try to reshape your portfolio to beat a recession or any crisis of the day,” said certified financial planner Amy Hubble, principal investment advisor at Radix Financial in Oklahoma City.
“Stocks are leading indicators and represent future expectations and GDP readings are lagging indicators,” he said. “So by the time we have the data to prove a recession, markets will be looking beyond it.”
Hubble says to focus on things you can control: for example, save more than spend, invest regularly, stay diversified, avoid high fees and aim for tax efficiency.
‘Don’t let the noise affect you’
While economic indicators are like the so-called Inverted yield curve – when shorter-term government bonds have higher yields than the longer-term variety – can be a sign of a potential recession, experts say Humans often have a tendency to see or interpret such patterns that Are not present.
Charles Sachs, CFP and chief investment officer of Kaufman Rossin Wealth in Miami, said there are a lot of jokes going around about “how bad economists are at predicting recessions,” because it’s impossible to know when future events will unfold.
“Don’t let the noise influence you,” he said, stressing the importance of a “long-term, strategic focus” when it comes to asset allocation.
“People get caught up in investing simplification,” he said, “but there’s a reason why investors like Warren Buffett aren’t doing that.” “They’re buying good companies at good values and they’re investing for the long term.”
Now is the time for a ‘well-diversified portfolio’
While assets like high quality bonds are performed well historically During recessions, it’s difficult for investors to “beat the market,” said Elliot Harman, CFP and partner at PRW Wealth Management in Quincy, Massachusetts.
“The market is forward-looking,” he said. “So maintaining a well-diversified portfolio has never been more important, because that’s how you allow yourself to participate when things go up.” Or you protect yourself if things go down.”
(TagstoTranslate)Financial advisor(T)Financial planner(T)Financial planning(T)Wealth(T)Personal savings(T)Stock market(T)Bonds(T)Investment strategy(T)Breaking news: investing(T)Personal finance (T)Financial Advice (T)Warren Buffett (T)Economic Events (T)Oklahoma City (T)Business News
