The Secret Ingredient In Stocks With Amazon-Like Growth Potential | personal financing
Any day now, you can expect your employer’s last quarterly 401(k) statement showing the current value of your life savings, and you might expect that the inventory and financing portion of your savings has lost its value since your last statement. Knowing that inflation is much higher than normal, interest rates are on the rise, and the economy may be heading into a recession, it is not surprising that your investments will be affected. But for the first time, in addition to your current 401(k) balance, companies are showing projections that show what your total savings might look like as monthly income after retirement. These numbers may be lower than you think.
Finding a financial advisor you trust who has the experience you need and is committed to working in your best interest can be overwhelming. That’s why you should consider Wealthramp’s free financial advisor matching service. Every advisor in the Wealthramp network is thoroughly vetted. Answer a few quick questions, review your advisor matches and schedule a free meeting with any or all of your match advisors. Wealthramp will never sell your data. You will not receive urgent sales calls from them. If you are ready to watch the best matches of Chancellor, get started now.
So what’s next? With the Fed tightening in a sluggish economy, there is a high risk of a recession, and even a slight contraction in economic growth could last for months or years. Telltale signs of recession among other things are when retail sales are down, manufacturing slows, companies stop hiring, and more people lose their jobs or are laid off. As alarming as the news may sound, a recession is part of the normal business cycle. Instead of reacting, this is the time to reconsider your financial plan to set yourself up for prosperity.
Whether you manage your money yourself or work with a trusted financial advisor to help you manage part or all of your portfolio, here’s it Five important actions you must take now To keep your fighting money choppy during tough economic times.
1) Keep your credit score high
In a period of high inflation, it costs everyone to borrow money regardless of their credit score. However, people with lower credit scores will suffer the most. Lenders charge lower fees to borrowers who have shown that they will repay loans on time as agreed. Banks use your credit score as an easy way to find out what kind of borrower you are. If over time you show a pattern of late payments, lenders will be wary of lending you money. The shorthand scale used to measure borrowing behavior is your credit score – a low scale means lenders are worried that you won’t repay them. To account for this risk, lenders charge more money to lend to non-compliant borrowers in the form of higher interest rates.
This is not the time to let your credit rating slide. If you need to borrow money, you will need to do so at the lowest possible interest rate, which is for those with high credit scores of over 700. If you carry credit card balances on an annual basis, have you considered the interest rate you are paying? A typical credit card charges you a fee of over 25% in annual interest. For example, imagine that you bought a set of summer patio furniture on sale for $10,000. If you have a $10,000 outstanding balance on your credit cards and you haven’t paid it, it’s like adding $2,500 on top of what you paid for the table and chairs.
2) Maintain your cash reserves
It’s important to get to the point where you know you ideally have six to 12 months of ready cash in an accessible account for emergencies and unexpected expenses. In a recession, this reserve fund becomes even more important in case you lose your job or any major unexpected event happens to you and your family. If you have enough thrift pillow, you will sleep better. The downside is that banks don’t pay much on their savings or money market accounts, but the advantage is that you’ll be able to access the money right away without having to sell losing stocks to raise money when the market is down. It also gives you the freedom to know that you won’t need to take out a loan when interest rates go up. It seems unfair that banks are quick to raise borrowing rates and much slower to raise rates on savings accounts, but the financial safety that comes with liquid cash reserves is worth it. The best way to set aside extra money is to make a lifestyle choice to live within your means.
3) Invest, but don’t gamble
Long-term inflation affects your savings and investment returns. When inflation is high – and we have seen recently that inflation reached 8.6% – it means that you are paying more but not getting more in return. Inflation near 9% is four times higher than normal. And over the years, even at lower rates, inflation has had a negative impact. The best way to stay ahead of inflation is to keep investing in a diversified portfolio of stocks because over time, stocks tend to grow faster than inflation.
If you are not sure how to create a diversified portfolio designed to protect and grow your money, this is where a well-established, independent and thoroughly audited financial advisor can help. Finding a financial advisor you can trust with the expertise to meet your financial needs and committed to working in your best interests can be overwhelming. That’s why you might want to consider Wealthramp’s free financial advisor matching service. Every advisor in the Wealthramp network is thoroughly vetted. Answer a few quick questions, review your advisor matches, and schedule a free meeting with any or all of your matched advisors. Wealthramp will never sell your data. You will not receive urgent sales calls from them. If you are ready to watch the best matches of Chancellor, get started now.
Take from the experts – investing is a turtle, not a hare. John Bogle of the Vanguard Group said investing is meant to be boring — investment expert Ben Stein asks what’s wrong with average? Billionaire investor Warren Buffett has never gambled. Buffett has earned billions through careful and consistent investment in value. He missed the best moment to get to Apple (AAPL). To this day, he remains uninvested in Tesla (TSLA). He does not understand Bitcoin and does not want to learn. In his entire investing career, he has rarely had a big win. So how did he accumulate all this wealth? In addition to a careful investment, one reason that is often overlooked is that he lived a very long life.
4) Look for inflation hedges
Another tactic during a recession is to choose investments that act as a hedge against inflation over long periods. Gold and commodities are short-term investments to protect your portfolio from stock market shocks because commodities like gold tend to move in the opposite direction to stocks. However, gold is a poor long-term investment, which is why many credit financial advisors recommend hedging only about 5% to 10% of your portfolio. When seeking to beat inflation, one of your best tactics is to diversify your entire portfolio. This does not mean random selection of exchange-traded funds in different sectors. Diversification requires creating a plan that you stick to and reviewing it when market indicators show you when. Your best bet is to reach out to a financial advisor who can look at your portfolio and help you ensure it is diversified.
5) Refine your CV and enhance your skills
Currently, unemployment has reached a historic low in the United States, whether it is shallow or deep, recessions often lead to companies laying off their employees. The best way to protect yourself from losing your job and to ensure that you can find a new job if necessary is to make yourself as valuable an employee as possible. If your current company offers education compensation, take advantage of this advantage and work towards a degree or certification that can increase your future earnings. There are also free or low-cost courses that you can pay yourself to boost your resume. Keep a record of your work accomplishments to turn a standard resume and cover letter into one that helps you stand out and attract the right attention. And stay connected to your professional and personal network.
Actions to be taken today
When you take defensive action to protect yourself and your family from a recession, decide whether to do it yourself using digital tools or team up with a rigorously vetted, fee-only credit financial advisor who works only for you, not as an agent for a brokerage firm. or insurance company. If you’re about to retire, choose an agent with experience who specializes in retirement income planning. They can help you:
- Create a tax-focused plan yourself or with their advice
- Create an investment strategy that you will be able to stick to over time
- Find ways to pay off high-interest debt
- Support for cash accounts
Finding the right financial advisor can be difficult. Let Wealthramp help you find the right advisor who will help you with your personal financial needs and situation.
Pam Krueger is a recognized investor, award-winning personal financial journalist, and founder and CEO of Wealthramp, a free advisor matching platform that connects people with vetted financial advisors for just a fee. She is also the creator and co-host of MoneyTrack, which aired on PBS from 2005-2019, and the podcast Friends Talk Money for PBS Next Avenue is currently in its seventh season.