Recession. Let’s call it what it is. It’s not “the R word”. It’s not a “rough patch”. It’s recession and, per the National Bureau of Economic Research, it is here.
In every economy, there are periods of growth and periods of recession, defined as two consecutive quarters of economic downturn. They are an inevitable part of the market cycle. Your retirement plan must have your prepared not only for the possibility of a recession, but to maximize the value of your investments when one arises.
Look at your overall goals
Let’s start by thinking about why and how we invest in the first place. Fundamentally, we invest because we have a source of income now and we know we will need a source of income in the future. A recession doesn’t change that dynamic. We don’t have the luxury of putting our investments on hold while we see what the market does. That is a recipe for failing to meet our retirement goals.
How do we invest? The adage is buy low and sell high. In order to buy low, there has to come a time when assets are relatively affordable. A recession is one of those times.
Don’t abandon the fundamentals