ARI BAUM CFP®
ARE YOU WORRIED ABOUT A MAJOR RECESSION? DO YOU THINK THE MARKETS ARE ABOUT TO COME TO A STANDSTILL ANY DAY NOW? “YES,” IS THE ANSWER FROM MOST FOLKS THESE DAYS AND MOST SMALL BUSINESS OWNERS AGREE, AS DO LOTS OF SO-CALLED ECONOMIC EXPERTS AND TALKING HEADS ON THE NEWS.
Still, no one really knows when the next recession will happen—or how severe it’s going to be. And worrying about it isn’t helpful or good for you. In fact, it’s more challenging to make money moves when your judgment is clouded by recession anxiety.
So, how can you cope? What can you do to set your recession fears aside, make confident decisions, and weather the slowdowns better?
6 STEPS TO BRAVING RECESSIONS WITH A COOL HEAD, CALM NERVES & CLARITY
1: DON’T BUY INTO THE HEADLINES
Strategy
Limit your news intake. Headlines are designed to scare us and attract as many eyeballs as possible. That clickbait can be toxic for anyone who takes in too much.
Put it in action
Stick to one (or a few) news sources you trust. Limit the time you spend checking the headlines. Also, do not take the news as gospel, especially when making significant financial decisions.
2: RESIST IMPULSIVE ACTIONS
Strategy
Think twice (or more) before making big money moves. Panic can snowball, especially when it feels like the bottom is falling out. Resist the urge to act immediately because it can lead to mistakes, not sound financial decisions.
Put it in action
Ask yourself, “Why am I doing this?” and “Is now really the right time to make this move?” Give yourself time, like days or weeks, to consider significant decisions carefully and think how they’ll affect you now and in the long-term.
3: RUN A WORST-CASE SCENARIO
Strategy
Think about your biggest recession fears and what the worst-case scenario would look like for you. Then, troubleshoot it.
Put it in action
Ask yourself, “Worst case, what could I lose in this or the next recession? What would I do if that happened?”
Running worst-case scenarios can help you see possible solutions—and maybe even some silver linings. That can put some of your bigger fears about a recession in a new light. It may even show you that your fears aren’t as bad as you’ve built them up to be.
4: DO A TEMPERATURE CHECK
Strategy
Now may be the time to make some shifts, or take a new approach. And you won’t know that if you just keep things on autopilot.
Put it in action
Carefully consider your risk tolerance, your investments, and how diversified your portfolio is. While you may want to make some changes now, it can also be smart to check in on your finances more frequently as markets shift. That will keep your finger on the pulse of things, so you can keep your expectations and reactions in check.
5: MAKE TIME TO RELAX
Strategy
Carve out time in your schedule to do activities that help you relax. Make that relaxation time part of your daily or weekly routine, even if it can’t be on the same day every week or at the same time every day.
Put it in action
Start simple with breathing exercises for 10 to 20 minutes a day. Of course, you could do anything you enjoy that helps you unwind and relax. That could mean exercising, reading, cooking, crafting, or learning new hobbies. Whatever you do, taking the time to relax can calm your brain and clear your head. This can help you think a little more clearly, even when you start to feel recession anxiety set in.
6: EXPAND YOUR OUTLOOK
Strategy
Extend your perspective—start looking past the next year or two. Opening up your outlook to the long-term can put current market conditions in context.
Put it in action
Ask yourself, “Will I still have these recession worries 10 or 15 years from now?” Remember that recessions are part of healthy market cycles and that over the long-term, market gains have historically outperformed their losses.
Since 1926, the S&P 500 has risen about 72% of the time, year-after-year. So, play the long game and keep an eye on the horizon, as well as on your next step.
WHAT RECESSION PANIC REALLY COSTS
& HOW TO TRULY BEAT IT
Are you surprised by any of these strategies? Do you already use some of them to deal with recession anxiety—or stress in general?
No matter how many recessions you’ve lived through, another one may rattle you. If that happens, you can get hung up on the things that you can’t control, like when the next recession will strike or how long it’s going to last.
That mindset does not help us make prudent decisions. When we give in to recession anxiety, it can cost us, both financially and psychologically.
On the financial side, any of us—even the savviest folks—can abandon their investments and strategies, losing sight of long-term goals and what it takes to reach them.
The anxiety can mean we focus on the negative and our mental health suffers. We are more likely to experience these effects if we’re feeling alone or out of options.
We can break free of that mindset! The truth is that when we focus on what we do control—like our outlook and our financial choices—we start seeing past the doom and gloom of recessions. Then we can start to make a plan for how to respond and make adjustments as circumstances change.
The content is developed from sources believed to be providing accurate information. Consult your financial professional before making any investment decision. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance does not guarantee future results.
Ari Baum, CFP® is the founder and CEO of Endurance Wealth Partners. With over 25 years of experience in the Financial Services industry, he brings his in-depth experience to Conceive, Believe, Achieve, for his clients.
Securities and Advisory services offered through Prospera Financial Services Inc. Member FINRA/SIPC.
Brokerage and Advisory accounts carried by Wells Fargo Clearing Services, LLC.
