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Preparing for a Recession: Tips for Investors to Weather the Storm

As discussions of a potential recession dominate economic conversations, investors must consider how they can best prepare for such an event. A recession, characterized by a significant decline in economic activity over a prolonged period, can significantly influence financial markets and individual investments.   To effectively navigate a recession, it is crucial to be proactive in your approach. As the saying goes, it is always better to be overprepared than underprepared. The following steps can help investors ride out the storm of a potential recession. Emergency Funds Before diving into investments, it is essential to prioritize establishing an emergency fund. This money serves as a financial cushion in the event of unexpected expenses, such as job loss, car repairs, or home repairs. Unexpected expenses are never enjoyable, but they are a fact of life. It is essential to avoid having to turn to loans or selling stocks to cover emergency expenses, as both options can be costly, whether due to interest charges or potential tax implications. Generally speaking, having three to six months’ worth of expenditures saved in an emergency fund is advised. Three months’ worth may be plenty if you are alone and just responsible for yourself. Aim for the higher end of the range, perhaps even six months to a year’s worth of spending, if you have a family and children. It could be a good idea to err on the side of caution and save more money in anticipation of a recession, given the potential for heightened uncertainty. Investing in Blue Chip Stocks As investors seek to navigate potential economic downturns, blue chip stocks may offer a dependable option. These well-known, established companies have proven their ability to generate long-term returns, regardless of broader economic conditions. Examples of blue chip stocks include industry leaders such as Apple, Coca-Cola, and Walmart, which are known for their strong business models and balance sheets. While not all blue chip stocks offer dividends, many have a history of consistently paying dividends and even increasing them over time. Dividends can provide a sense of financial stability and reward investors for their patience in holding onto a stock. While the stock prices of Apple, Coca-Cola, and Walmart have all experienced declines in 2022, their shareholders have still received dividend payouts during that time. This demonstrates the potential resilience of blue chip stocks, even in challenging economic conditions. Diversification Through ETFs It is important to recognize that no investment is entirely risk-free, no matter how promising it may seem. However, investors can take steps to mitigate some of this risk by investing in broad exchange-traded funds (ETFs). ETFs are investment vehicles that contain a diverse range of stocks within a single investment. One strategy for minimizing risk is to focus on ETFs that hold large-cap companies, defined as those with a market capitalization of at least $10 billion. These companies tend to offer a degree of stability due to their size and market presence while investing in a broad-based ETF can provide diversification across a range of sectors. The Vanguard S&P 500 ETF, which contains the 500 biggest publicly listed U.S. firms, is an illustration of such an ETF. At all times, it’s crucial to avoid being overly dependent on a select few businesses, but in difficult economic times, this is especially true. Investors may spread out some of the risks associated with stock investment through diversification using ETFs. Stay the Course: The Importance of Continuing to Invest in Times of Economic Uncertainty In times of economic uncertainty, it can be tempting to halt investments until conditions improve. However, this approach can ultimately be detrimental to your long-term financial goals. Despite stock prices often experiencing significant drops during recessions, these periods can also present opportunities to purchase valuable stocks at discounted prices. History has shown that investors often see the highest returns on their investments when they purchase during downturns and eventually benefit from the eventual recovery. Therefore, if your focus is on the long term, a successful investment strategy is important to avoid making short-term decisions that do not align with your best interests. To prepare for and take advantage of a recession, investors should continue investing, even when prices are lower. This proactive approach can ultimately lead to long-term financial success.
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Email: [email protected]
Phone: 9187441333

Bio:
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Mark’s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families. Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation. Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.

Disclosure:
Securities offered through GRF Capital Investors, Inc., 6506 South Lewis Avenue, Suite 160 Tulsa, OK 74136 Phone: 918-744-1333 Fax: 918-744-1564 Securities cleared through RBC Capital Markets, LLC. 60 South 6th St., Minneapolis, MN 55402Member FINRA www.finra.org / SIPC www.sipc.orgBroker Check http://brokercheck.finra.org/

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