Positioned for an Economic Downturn?
My most recent task has been to make sure that my wife and I are ready to take advantage of an economic downturn. You see downturns in the economy always represent an opportunity for those who are ready. I do not know if we are headed for a recession but we have had a great run of growth and it is about time for the “business cycle” to swing the other way. By preparing for the worst you can position yourself to take advantage of the bad times. So instead of worrying how you are going to pay the bills you can look around and think, “EVERYTHING IS ON SALE!!”
Being prepared entails three steps. The first is getting out of debt. Freeing up your available cash will allow you to spend on investments instead of paying someone else interest. Next is a cash reserve or emegency fund. By building up six months of expeneses you ensure that nothing comes along and kills your plans. And finally a cash reserve for investments. When you have money sitting in an account that is just for investments you prepare yourself to make a deal. So when the housing market drops you are ready to purchase real estate. When the stock market drops you are ready to “buy low.” Being prepared in this fashion really puts you ahead of the game. Right now my wife and I have finished the first two steps and are rapidly pursuing step 3. Since I am not ready to jump into real estate I will be looking to put more into the stock market and fully fund our Roth IRA. Are you positioned for a downturn? If not now is the time to get started and get your finances in order. Once you do you will never look at a slow down the same.
