The “father” of the yield curve is warning people to begin preparations or a recession. While this isn’t bad advice, as one should always be looking to increase personal wealth while protecting it if the worst does happen, but you also shouldn’t live in fear.
First, the best way to prepare for a recession is to stop worrying about it and fearing it. It won’t help if you’re losing sleep over an economic problem and cannot think clearly enough to make the right decisions. Fear can be a powerful motivator, but don’t let it take over your life.
Second, once you understand that anything is possible (economically and politically) you won’t have much to fear. Instead, you’ll brace yourself and your wealth to weather the potential storms ahead. I understand that’s difficult to push fear aside when you hear that Duke University professor Campbell Harvey (the father of the yield curve) says the bond yield curve is “flashing code red” for a recession.
While I agree with Harvey, people shouldn’t wait to batten down the hatches, but prepare in advance, I don’t think making yourself sick with worry will help. “This is the time where you need to reflect upon your strategy. It’s actually easy to manage assets when the economy is booming. It’s much more difficult to manage into a turning point,” Harvey told Josh Brown, CEO and co-founder of Ritholtz Wealth Management and a CNBC “Fast Money” contributor, in an interview for “The Compound” on YouTube. “It’s way better to have a plan to go by than to find yourself in a situation where the recession hits and you have to improvise.”
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And that’s something I can agree with! Prepare yourself by understanding what you might need. If you have a concern about a drop or loss of income, you could mitigate these fears by paying off any debt and reducing monthly expenses while acquiring some passive income. If you have concerns that the government’s political games could devalue the dollar, you could always buy some gold or silver. Precious metals have been money for longer than the fiat dollar and they will continue to be long after the dollar’s collapse.
Also, keep in mind, personal wealth isn’t necessarily about who went to the right school and who has the right job. Sometimes it’s as easy as seeing the cracks in the economy and responding in a cool and levelheaded matter to your own personal financial situation. Remember, saving for retirement or “investing in the stock market” may not be the best route.
As Daniel Ameduri points out in his book, Don’t Save for Retirement: A Millennial’s Guide to Financial Freedom, Ameduri points out the flaws in the current system and details ways to earn passive income that could get you to weather any recession, all while living financially free.
Take the right steps at the right time and prepare your personal wealth to weather the storm so you’ll never have to live in fear when you read headlines declaring a recession is imminent. Because whether it’s true or not, you know you’re ready!
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. We will never sell any shares during any active email marketing campaigns. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.