Simple steps. How to protect your money from a “potential recession”?

Many fear that the world economy will enter a recession, but even if it does not, there are still many financial and economic indicators that worry investors and consumers.

Price inflation in the United States, for example, rose 8.6 percent in May from a year ago, the fastest rate in 40 years, and exceptional rises have fluctuated around the world.

So, if you are looking for ways to protect yourself financially while making the most of what you have, here are some options to consider, CNN quoted financial experts as saying.

Apply for a job now

With low unemployment rates and many jobs, the market still includes many jobs, but if a recession occurs, it could change quickly, and some companies, especially in the area of ​​mortgage lending, have started announcing layoffs.

“If you are not working, or are looking for a better job, now would be a good time to take advantage of the very strong job market and secure your job,” says Mary Adam, certified financial planner.

Take advantage of the boom in the real estate market

If you’re considering selling your home, now’s the time. Year-on-year house prices rose nearly 15 percent in April, and rents rose nearly 17 percent (in the US).

In contrast, mortgage interest rates are about three percentage points higher than a year ago, making buying a home more expensive and potentially dampening demand.

“I would suggest that anyone planning to put their house on the market do so immediately,” says Adam.

Home and car loans

If you are about to buy or refinance a home, keep the lowest fixed rate available to you as soon as possible.

Lacey Rogers, a certified financial planner, appeals not to rush into things like an expensive house or car that does not fit a person’s ability.

Keep cash

Having liquid assets to cover you in an emergency or severe market downturn is always a good idea, but it is especially important if you are facing major events, including retrenchments, which typically increase during recessions. .

This means setting aside enough money, cash, money market money or short-term fixed-income instruments, to cover several months’ living expenses, emergencies or any major expected expenses such as university fees.

Rob Williams, managing director of financial planning, retirement income and wealth management at Charles Schwab, sees two to four years in low-volatility investments as a short-term bond fund. This will help you resist any market downturn and give your investments time to recover.

Credit cards .. zero them

If you carry balances on your credit cards, which usually have high variable interest rates, consider switching them to a zero-rate balance transfer card that is for 12 to 21 months, McBride suggested.

“It isolates you from higher interest rates for the next year and a half, and gives you a clear path to pay off your debt forever,” he said.

He stressed that “lower debt and increased savings will enable you to cope better with higher interest rates, and will be especially valuable as the economy declines.”

If you are not switching to a zero interest credit card, another option may be to take out a personal loan at a relatively low fixed interest rate.

In any case, the best advice is to do everything possible to pay off your debt quickly.

Rebalance the equity portfolio

It is easy to say that you have a high risk tolerance when stocks rise, but you need to be able to resist the volatility that inevitably accompanies investing over time.

So review your possessions to make sure they are still in line with your risk tolerance.

“If you build a diversified (equity) portfolio that matches your time horizon and risk tolerance, it’s likely that the recent downturn in the market is just a picture in your long-term investment plan,” Williams said.

Stagnant money also loses

If you keep money in a savings account, inflation is likely to exceed any interest you earn, which means that while preserving your capital, you will eventually lose purchasing power.

Adam therefore suggests not letting your feelings about the economy or the markets sabotage your long-term prosperity. Stay Invested and Calm “The best way to achieve your long-term goals is to just keep investing,” says Adam, noting that accelerated news reports of rising gas and food prices or talks about a possible world war are worrying, but “constructive”. financial security requires a calm hand. ” a vase. ”

Also remember that it is impossible to make perfect choices because no one has perfect information, so “gather your facts, then try to make the best decision based on those facts as well as your individual goals and risk tolerance,” says Adam.

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