Find a new job now
It remains a job seeker’s market at the moment due to extremely low unemployment and numerous job vacancies. But in the event of a recession, that could change quickly. So, make as much hay as possible.
“If you don’t have a job or aren’t looking for a better job, now is a great time to take advantage of a very strong job market and get a position,” says Mary Adam, a Florida-based certified financial planner.
To help you with your search, here are some resume dos and don’ts.
Benefit from the real estate boom
If you’ve been thinking about selling your home for a long time, now might be the perfect time to take the plunge.
The housing market is on an upward trend, with house prices up nearly 15% year-on-year in April and rents up nearly 17%.
Meanwhile, mortgage rates are now about 2 percentage points higher than they were at the start of the year, making it significantly more expensive to buy a home and potentially dampening demand. “I would advise anyone planning to put their house on the market to do so immediately,” Adam said.
Home Loans: Get Fixed Rates Now
If you’re about to buy or refinance a home, secure the lowest fixed rate as soon as possible.
That said, “Don’t rush to buy bulky items that don’t work for you just because interest rates might rise. Rushing to buy big-ticket items that don’t fit your budget, like a house or a car, will get you into trouble, regardless of future interest rate changes,” de said Lacy Rogers, a certified financial planner in Texas.
If you already have an adjustable rate home equity line of credit and have used a portion of it for home improvement projects, ask your lender if they would like to set an interest rate on your outstanding balance, effectively creating a fixed rate Home equity loans, Greg advises Bankrate.com’s chief financial analyst Mike Bride.
If that’s not possible, you should consider cashing out that balance by buying a HELOC from another lender at a lower promotional rate, McBride said. Meet your short-term liquidity needs
It’s always a good idea to have cash to back you up in the event of an emergency or a severe market downturn. But it’s especially important when you’re facing major events beyond your control — including layoffs, which typically spike during recessions.
This means you have enough money in the form of cash, money market funds or short-term fixed income vehicles to cover living expenses for a few months, emergencies or large anticipated expenses (such as a down payment or college tuition).
Credit Cards: Less Bites
McBride recommends that if you have a balance on your credit card (often with a high variable interest rate), consider transferring it to a zero-interest balance transfer card, which locks in zero interest for between 12 and 21 months.
“This protects you from rate hikes over the next year and a half and gives you a clear runway to pay down your debt once and for all,” he said. “Less debt and more savings can make you more productive. A good handle on rising interest rates, and especially valuable when the economy is in trouble.”
If you’re not moving to a zero-interest debit card, another option might be to get a relatively low fixed-rate personal loan.
In any case, the best advice is to do everything possible to clear your balance as quickly as possible.
Rebalance your portfolio as needed
It’s easy to say that when stocks go up, you have a high tolerance for risk. But you have to be able to live with the volatility that inevitably comes with investing over time.
So check your assets to make sure they still meet your risk tolerance for the potentially rough road ahead.
While you’re at it, if after years of stock gains you find you’re overweight in a certain area, rebalance your portfolio. For example, if you’re overweight growth stocks now, Adam suggests possibly reallocating some money through mutual funds to slower-growing, dividend-paying value stocks.
Also, check that you have at least some bond exposure. While inflation has delivered the worst quarterly returns for high-quality bonds in 40 years, don’t ignore them.
“If the Fed raises rates aggressively to keep inflation in check leading to a recession, bonds are likely to do well. Recessions tend to have a much bigger impact on high-quality bonds than stocks,” Bennyhoff said.
Find out what “losing money” means to you.
If you put money in a savings account or CD, any interest you earn may be offset by inflation. So while you retain capital, over time you lose purchasing power.
On the other hand, if preserving capital in a year or two is more important than risking losing some of it — which is what happens if you invest in stocks — then the inflation loss may be worth it to you because you get Something Bennihoff calls a “sleepless return.”
But for long-term goals, understand how much risk you’re willing to take to get higher returns and prevent inflation from eroding your savings and profits.
“Over time, if you can increase your wealth, you’ll get better and safer,” Adam said.
Keep cool. Do your best. then “let go”
News of lightning-fast increases in gas and food prices or rumors of a possible world war are disturbing. But don’t act on the news. Building financial security over time requires a cool, steady hand.
“Don’t let your sense of the economy or the market undermine your long-term growth. Stay invested, stay disciplined. History shows that people – even experts – often think the market is wrong. The best way to achieve your long-term goals It’s just staying invested and sticking to your allocation,” Adam said.
During the crises of the last century, stocks typically rose faster than anyone expected at the time and, on average, performed well over time.
