Even though inflation is showing signs of slowing, some investors may fear the worst in the face of a possible impending economic slowdown.
A recent Nationwide survey finds that more than two-thirds of respondents – 68% – expect a recession in the next six months. Meanwhile, 62% of respondents think the recession will be as bad or worse than the Great Recession of 2007 to 2009.
Findings show that many Americans are still feeling the financial pinch as they dine out less, delay major purchases such as homes and rely more on credit cards, according to the survey of 2,000 people between the March 30 and April 13.
Kamila Elliott, Certified Financial Planner and Co-Founder and CEO of Collective Wealth Partnersa boutique consulting firm in Atlanta, said it had clients asking about the prospect of a deep recession.
Elliott, who is a member of the CNBC Advisor Council, said she reminds them that there continues to be very positive economic news alongside the more negative headlines about banks or tech layoffs.
“One of the things I share with others is control what you can control,” Elliott said.
Although what happens with the economy or your employer may be out of your control, there are steps you can take to strengthen your personal financial security.
1. Cut expenses and pay down debt
To put yourself on a better financial footing, Elliott recommends starting by reviewing your recent transactions and identifying where you can eliminate unnecessary spending.
With that extra cash, try to reduce your debt balances, which will put you in a more positive position in a recession, she said.
2. Increase savings
By increasing your emergency savings, you can also increase your cash flow, Elliott advised.
This is useful if you are laid off or encounter another financial emergency. Experts generally recommend planning at least three to six months of expenses to deal with such an event.
On a positive note, Elliott said the strength in the job market meant that clients who had been laid off had been unemployed for less than three months.
“Some of them did pretty well,” she said.
3. Be opportunistic with investments
If you’re five years away or even closer to retirement, now is a good time to sit down with a reputable financial planner to make sure you’re on the right track, Elliott said.
For those further away from retirement — with that goal in 10 to 30 years — now may be the time to take more risk since you have time to ride out market volatility, Elliott said.
The average market return tends to bounce, which can lead to significant progress over time.
For many, we are using it as a buying opportunity to buy some stocks that are currently quite low in price.
CEO of Collective Wealth Partners
Elliott said it reminded him of a famous quote from legendary investor Warren Buffett: “Be afraid when others are greedy and greedy when others are afraid.”
“We embrace this philosophy by reviewing our investments whenever there is fear and there is risk, often there is opportunity,” Elliott said.
“For many, we’re using it as a buying opportunity to buy some stocks that are currently priced quite low,” she added.