MIAMI – After the government released another record-breaking report on inflation, many experts are warning of a recession.
To prepare for a slowdown, the most important action item is to make sure to beef up your emergency reserve fund.
Your goal is to have enough money in a safe, liquid account that can cover six to 12 months worth of living expenses.
If you’re retired, consider keeping one to two years worth of expenses in reserve to avoid being forced to sell assets at lower levels just to pay the bills.
Next, reduce credit card or any high interest debt as quickly as possible, because it’s likely that the Federal Reserve is going to keep increasing interest rates.
Presuming that you have ample savings and no high interest debt, now may be a great time to invest. After all, the U.S. stock market is down by about 20% this year and bonds are down by about 10%. These assets may be the only things that are cheaper now than they were six months ago.
If you have a company retirement plan, then using that may make the most sense, especially if you have an employer matching your contributions.
Otherwise, you can put a set amount of money into a portfolio, which can help you invest, even when you would really prefer to stash your cash under the proverbial mattress.
