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5 things your wealth manager wants you to know about a recession

First of all, your wealth manager wants you to know that yes, the market is scary. Yes, it’s volatile as we oscillate back and forth between talk of recession and inflation. However, there is always hope and a silver lining if you know where to look.

Here are five things you need to know as you consume a daily barrage of bad news.

Turn off the news

We’re not suggesting that you stop being an informed citizen, simply that you take intentional breaks from daily market updates. The stock market is volatile due, in part, to reactionary investor actions based on what’s trending in the news.

Instead of basing major financial decisions on the daily news cycle, trust the plan you’ve created with your wealth manager. Smart decisions require high-level consideration for long-term growth rather than panicky television or Twitter soundbites.

Call your wealth manager

Wealth management firms understand that clients are concerned and watching the market. Bring us your questions! If you’re unsure which news reports are important to you or where to find good information, we can help with that.

Understand inflection points

The Treasury bond yield inversion is perhaps the most important inflection point we’ve seen thus far. Early this month, the difference between short- and long-term Treasury bond yields remained inverted at levels not seen since the pre-recession dip of 2007.

An inversion occurs when yields on short-term bonds are higher than those of long-term bonds, which is the opposite of normal. Since yields and prices move in different directions, an inversion is a reliable indicator that recession is imminent. It’s happened before every major recession in the age of the stock market, but it’s also happened without a following recession.

This inflection point is important and gets the attention of every wealth manager and investment advisor worth their salt. But, it’s just one of several meaningful data points used to try and predict economic patterns and possibilities. As the Fed attempts to control inflation by raising interest rates, the economy naturally contracts. As economic growth slows and stock market dividends take a hit, some investors “buy the dip” and others hang on for the ride.

Make smart choices

So, what should you do? As with all the information we use to create individualized wealth preservation strategies for Good Life clients, the answer is, “It depends.” Making smart financial decisions that are right for you require thoughtful consideration of your timeline, financial goals, and current assets.

That’s why our advising process involves so many questions right from the start, to establish a baseline of information upon which we can help guide our clients to the best wealth management strategies to support their plans and risk tolerance.

Reassess your financial plan

While we don’t recommend making rash decisions based on volatile markets and scary economic news, it’s always a good time to get together with your wealth manager and reassess your baseline. Has your timeline changed? What financial goals are you still aspiring to reach, and have you added new goals? Are your current assets, including cash, still meeting your needs in the current economy?

These are all questions we’ll address when you set up a consultation. Even if you’re not currently a Good Life Asset Strategies client, come see us. Bring the plan you and your wealth manager have put together, and get a second opinion.

You wouldn’t leave a serious health decision up to just one doctor, would you? Your financial health deserves the same consideration. A great wealth manager will help you reassess your current plan to make sure your assets are protected and your net worth continues to grow, even in a recession.

It’s all about making well-informed, smart decisions based on reason and best practices.