1. The current inflation outlook and the likelihood of a recession
The Fed will attempt to slow the economy to bring inflation in line by raising interest rates. But many consumers still have cash and are sitting on record amounts of home equity. All that money people saved during quarantine is now being spent. While spending may be slowing down, there still seems to be a ton of pent up demand to get out and enjoy life, which often involves spending money.
As the White House has pointed out, there doesn’t have to be a recession. If unemployment remains low, any recession would likely be moderate, if any. Speaking of personal finances here, many people are in good shape to weather this type of recession; many Americans may not even feel the recession.
Financial Planner LA’s David Rae appears on In Depth with Bob DeCastro, which airs on Fox 11 LA and KCOP 13 Los Angeles. Topics include inflation, the stock market, invest now, financial advice and other personal finance news of the week. Watch this personal finance video and keep reading for more information on managing inflation and where to invest now.
2.The bear market: what does it mean for investors?
We are probably closer to the bottom of the bear market than the former high of the US equity indices. If you choose to bail out your investments, it will likely be a costly mistake that will harm your financial security. Think of a bear market as a big sell-off in stocks; who doesn’t love a nice 20% off something you wanted to buy anyway?
If you need a little more coaxing to stay invested, consider this. If you bought stocks on the first day of the average bear market since World War II, you would have been rewarded with outsized stock returns for the next 12 months, averaging more than 22% each time the US stock market rallies. was recovering from a bear market.
3. What does the future hold for us? How long are we going to endure this uncertain economic environment?
Every time America has experienced a bear market or recession, the stock market has returned to new highs. Missing out on those big returns are wealth killers. Don’t miss. Although past performance does not indicate future results, there is no reason to think that this time will be any different.
Killing inflation (or at least bringing it closer to the 2% per year target) will likely take some time. We will probably live in uncertainty for at least another year. If you’re still employed, use the bear market as motivation to get serious about your finances.
Some shocking statistics:
-1/3 of people do not save anything for retirement
-1/3 of people earning $250,000 live paycheck to paycheck.
You can’t get out of bad money habits. As a Certified Financial Planner™, I don’t care where you spend your money or how much you spend as long as you’re on track to meet your various financial goals.