When rumors and reports of a possible recession surface, many people have the tendency to panic. Financial adviser Ryan Sheffer from Advance Capital Management in Grand Rapids says it isn't a time to be scared, but rather to prepare.
A recession is commonly defined as when the GDP diminishes for two consecutive quarters, businesses cease to expand, the unemployment rate rises, and housing prices decline. What many people don't know is that stock market volatility is a symptom of a recession, rather than a sign of one coming. There have been twelve recessions since 1945. Those recessions on average lasted less than a year. The good news, it often takes six months to determine that the country is in a recession, and by that point, in many cases, it is already half over.
- Here are some steps you can take to prepare for a recession:
- Build or increase your emergency fund.
- Don't make any fear-driven moves with your investments.
- Avoid taking on debt.
- Create a contingency plan in case of a possible layoff
- If you are nearing retirement, visit with your financial advisor to determine the proper steps for your particular situation.
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