How To Protect Your Nest Egg

Investing During A Recession:

It's no secret that the economy isn't doing well right now. The rise in inflation coupled with the hawkish stance by the Federal Reserve might soon push us into a recession.

Economists are watching an inverted yield curve, one of the most reliable predictors of a recession. The New York Fed model says the U.S. economy will contract this year and next, assigning an 80% probability to a hard landing.

Investing in A Recession

There is no way to know when bear markets have hit their bottom and when it is time to buy. Dollar-cost averaging is the best strategy when investing in recessions or boom times.

Dividend Stocks

Money from investments that pay dividends can be put back into the stock as an investor will average down, which is an excellent way to accumulate more stock when the stock is cheap.

Investing in the S&P 500 provides diversification to all sectors of the economy based on market-cap weighting. In addition, one gets exposure to defensive and growth industries that could help your portfolio after the recession ends.

Mutual Funds and Exchange-Traded Funds

Bond Investing

Shorter-duration bonds, in general, outperform longer-dated ones in a rising rate environment. Therefore, holding individual bonds to maturity or building a ladder of individual bonds is advisable in an increasing interest rate environment.

Traditionally, real estate has been a great way to hedge against inflation. Typically, the value of real estate rises faster than inflation since your mortgage payment is fixed, but one can raise rents to market levels, keeping pace or exceeding inflation.

Real Estate

Farmland Investing

Farmland is well-suited to retain value over time, even during recessions. Farmland value increases when agricultural products become more expensive since the underlying land becomes more valuable.

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