With investors worried about a recession, the advisor recommends taking three steps now

Financial advisers to prepare for a soft recession

Even as inflation shows signs of slowing, some investors may be fearing the worst about a possible looming economic downturn.

A recent Nationwide poll notes that more than two-thirds of respondents – 68% – expect a recession within the next six months. Meanwhile, 62% of respondents believe the recession will be as severe or worse than the Great Recession of 2007-2009.

The results show many Americans are still feeling financially tight as they eat out less, delay making major purchases like buying a home, and rely more on credit cards, according to the survey of 2,000 people between March 30 and March 30 April 13 was performed.

More from Ask an Advisor.

Here are more perspectives from the FA Council on how to navigate this economy while building wealth.

Kamila Elliott, Certified Financial Planner and Co-Founder and CEO of Collective Wealth Partnersa boutique consulting firm in Atlanta, said it has clients asking it about the prospect of a severe recession.

Elliott, who is a member of the CNBC Advisor Council, said she reminds her that alongside more negative headlines about banks or tech layoffs, there is still very positive economic news.

“One of the things I share with others is control over what you can control,” Elliott said.

While you may not have control over what happens to the economy or your employer, there are steps you can take to improve your personal financial security.

1. Reduce expenses and pay off debt

To better position yourself financially, Elliott recommends first taking a look at your recent transactions and finding out where you can avoid unnecessary spending.

With that extra money, try to reduce your debt, which would put you in a more positive position in the event of a recession, she said.

2. Increase savings

By increasing your emergency savings, you can also increase your liquidity, advises Elliott.

This is helpful if you are laid off or encounter any other financial hardship. Experts generally recommend planning at least three to six months of spending to survive such an event.

On a positive note, Elliott said the strong job market meant laid-off clients were out of work for less than three months.

“Some of them turned out quite well,” she said.

3. Be opportunistic about investing

If you’re retiring in five years or even closer to retirement, now is the time to sit down with a trusted financial planner to make sure you’re on the right track, Elliott said.

For those even further from retirement — with that goal in 10 to 30 years — this could be a time to take more risk because they have time to weather the market volatility, Elliott said.

The average market return tends to recover, which can lead to significant advances over time.

For many, we use it as a buying opportunity to buy specific securities that are currently relatively cheaply priced.

Kamila Elliot

CEO of Collective Wealth Partners

Elliott said it reminded her of a famous quote from legendary investor Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.”

“Our philosophy when looking at our investments is that whenever there is fear and risk, there is often opportunity,” said Elliott.

“For many, we’re using it as a buying opportunity to buy certain securities that are currently priced relatively cheaply,” she added.

https://www.cnbc.com/2023/05/19/as-investors-worry-about-a-recession-advisor-says-to-take-3-steps-now.html With investors worried about a recession, the advisor recommends taking three steps now


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