Recessions and Your Investments
How will recessions impact your investments? Russ Gaiser from Buffalo-based The Financial Guys, explains.
Key Takeaways
- Build an emergency fund of 3-6 months of expenses (lean toward 6 months if you have a single household income) to cover essential needs like mortgage, utilities, food, and transportation during a job loss
- Stop trying to time the market; instead focus on time in the market—27 of the 30 best market days since 2006 occurred during recessions, so staying invested and rebalancing during volatility is key
- Assess your personal recession risk by identifying your worst-case scenario (job loss, dual vs. single income household, job security), then work backward to address those vulnerabilities before a recession hits
- Young investors with long time horizons should view market downturns as sales opportunities to buy stocks at lower prices through dollar-cost averaging, similar to shopping for 50% discounts
- Get your 'four walls' in order first—mortgage/rent, food, utilities, and transportation—before investing in anything else; this forms your financial foundation during economic contraction
How will recessions impact your investments? Russ Gaiser from Buffalo-based The Financial Guys, explains.
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