Americans are nervous as prices are high and fears of a recession are swirling. Now is a good time to highlight the six potential upturns in recession in both economic and financial markets, rather than feeling helpless.
1. Emergency reserves are cool again. A self-funded safety net makes the difference between throwing, turning, and sleeping soundly.
So make sure your emergency reserves can cover your living expenses for 6-12 months while the economy is still growing. If you’re already retired, increase the cost to a year or two so you’re forced to sell your low-level assets just to pay the invoice.
Keep this money in an accessible savings deposit, checking deposit, or money market account. Now that the Federal Reserve has raised short-term interest rates, it should be a little easier to leap into the safe.
2. Reducing credit card (or high interest rate) debt may be the best investment in 2022. The idea of paying back 15-20% of credit card balances is even more compelling when financial markets are in turmoil.
The guaranteed (and risk-free) return that the down payment brings is not only good for your balance sheet, but ultimately you this year, instead of thinking that you will make more money by investing than paying off your debt. The best investment.
3. The dollar cost averaging method makes you bold. It is difficult to give courage to invest as the market collapses. So putting a certain amount in your portfolio (dollar cost averaging), like contributing to an employer-based severance pay system, can help you suck up your hard-earned money, even if you really want to hide it. .. Your cash under a proof mattress.
4. Loss conversions are more compelling. If you have a traditional (pre-tax) retirement account, market losses may reduce the burden of converting to losses a bit. For example, if your account was worth $ 10,000 at the beginning of the year and is now $ 7,500, today’s conversion will reduce your taxable income increase.
Ideally, whatever you convert keeps you within a reasonable tax rate range, and for this to work you need to have a non-retirement fund available to pay your tax obligations. I have.
Loss assets are tax exempt and no tax is levied when you retire and withdraw money. Roth plans are not subject to Mandatory Minimum Distribution (RMD) and can be used to help manage future taxation and / or Medicare cost increases for income-tested social security benefits. increase.
5. Your job may be a ballast against uncertainty. The current labor market remains strong, despite reports that some former growth companies have withdrawn.
In fact, there are still more than 11 million jobs, and in many industries, bosses are making concessions to keep existing workers happy.
However, if the slowdown is imminent, consider using a free platform to improve yourself or see if your company will pay for the certificate program. Remember to spend time on your network so that you can activate it in the event of a change of circumstances.
6. Side hustle is convenient. During the pandemic, many have found time to generate another stream of income — on the side. These side hustle have become a way to guide creative energy and at the same time make a little money. Many who neglect these projects should consider launching a side hustle to generate extra income and manage their financial life to some extent.
Jill Schlesinger of CFP is a business analyst at CBS News. A former options trader and CIO of an investment adviser, she welcomes comments and questions at email@example.com. Check out her website at www.jillonmoney.com.
https://www.siliconvalley.com/2022/07/04/jill-on-money-the-upside-of-a-downturn/ The good side of the recession