Markets are jittery and recession fears are growing.
But experts remain divided on whats ahead for 2025.
While others argue that experiencing three bear markets in a single decade would be an extremely rare occurrence.
Need help creating adiversified portfolio? Check out these 7 tips.
The big question: Is your portfolio ready for whatever comes next?
The return on stocks is typically better than bonds during periods of economic growth, which ismostof the time.
In principle, yes.
But to correctly allocate your funds in anticipation of a recession, you first must correctly predict the recession.
This is much harder than it sounds.
Groceries, gas, utilities… even your phone bill can feel the squeeze.
There are ways to save.
From cutting unnecessary costs to consolidating debt, heres how to recession-proof your everyday spending before things get tighter.
Check out these money-saving moves.
Here are some tips.
The sooner you might block out emotions and evaluate your personal situation objectively, the better.
This can mean periodically checking in with a trusted advisor.
Reconsider Your Risk Tolerance
Can you tolerate the fluctuations in your investment accounts associated with a garden variety recession?
What about a repeat of a historical worst-case scenario?
If the answer to either question is no, it might make sense to re-evaluate yourrisk tolerance.
Your best bet is to ignore all of the hype and just keep doing what youve been doing.
Just remember that as certain as the future seems, it has a habit of surprising us.
But What if You Just Cant Stomach a Hands-off Approach?
Consider Dividends
Investing in a diversified pool ofdividend paying stockscan help you avoid falling into a value trap.
But generally, its a good sign when a company consistently increases its dividends to shareholders.
Its usually a signal of financial strength and healthy cash flow traits that help companies weather a recession.
Plus a healthy dividend delivers passive income to your portfolio something youll appreciate during a turbulent market.
Options might include high-yield bonds or bonds issued by emerging market economies.
Financial experts also suggest exploringSeries I Savings Bondsfrom the U.S. Treasury Department.
Thesesavings bondsare offering an impressive 9.62% return now through October with very low risk.
These companiesshouldwithstand market turbulence better than their weaker counterparts.
Think Globally
These days, broadly diversified generally means including international investments.
Returns between U.S. and international stocks tend to be cyclical.
Look at Mutual Funds and ETFs
Handpicking individual stocks is tricky and time consuming.
Investing in funds gives you exposure to dozens of different companies with a single purchase instant diversification.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
David Metzger is a fee-only wealth manager in Chicago.
He is a certified financial planner (CFP) and a chartered financial analyst (CFA).
