What's New + What We Can Do To Protect Ourselves
So we've hit the mid-point of October. What's new? Not much. Assets continue to be beaten down - all of them. All major world markets are in the red - big time. Recession has either arrived or will soon arrive everywhere.
World-wide recessions aren't typical. Usually some areas are hit but some aren't. If you now a part of the world that's not under the recession thumb, please let us know. What will this mean? Who knows?
For some specifics, stocks were down, bonds were down, gold and other precious metals were down, commodities were down. 'Nough said.
So what's guy or gal to do? Setting aside the various possibilities that might at least hold the line in our portfolios (since these may or may not work) how about we all tackle the one thing that will assist us in preserving our wealth (somewhat) and our sanity (a lot)? Try this on for size. We sent it to our clients.
What We Can Do To Protect Ourselves
With that background, the Fed is aggressively raising rates, even as a recession unfolds - an unusual policy to say the least.
We came across a comment that sums up what’s going on about as well as anything;
If the Fed “wins,” inflation presumably comes back under control, but market values destroy the retirement assets and jobs of many. If markets win, inflation continues to destroy the standard of living of all.
This email is not intended to create stress, certainly not panic. It’s simply an attempt to face facts squarely so that we can - each of us - take whatever measures we can to be aware, be prepared, and weather the storm as best we can.
Bear Markets in stocks and bonds will wear down our investments to some degree (certainly more than we’d like). On our end, we’re doing what we can to minimize this. There’s only so much we can do. We don’t control the markets or the economy. None of us can. But we can all control what we spend. So here's a strong suggestion:
We should all know our annual expenses as specifically as possible Of these, some will be necessary, either fixed (e.g. mortgage) or variable (e.g., food). Other expenses will fall into the “discretionary” category. Of these, we should all be able to identify those that we can forego if necessary.
The reason this is critical: We can’t always accurately predict how a serious, even severe, recession will impact us. Add to this the erosion of our wealth that ongoing inflation brings with it. While we can’t reverse a recession or this inflation, we can manage - at least to some degree - its impact on our finances and our lives by controlling our spending.
While some of you have engaged in a detailed process of identifying and categorizing your expenses, others have not. For those who have a more detailed budget, re-visit these to see if they are still accurate. For those who have not tackled what is, for some, an either daunting of distasteful project, don’t put this off now. It could prove to be the most effective weapon any of us will have to combat the forces underrmining our security and peace of mind.
While we will address this in upcoming reviews, please don’t wait to get started. If you need help getting started, please do contact us as soon as possible. There really is urgency here.
There’s more we can all do to prepare. We’ve addressed this in the past; but for now, focus on this item. Do your best.
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