It took the Treasury Department one year to announce that we were in recession. I wonder how long it will take to announce when we are in recovery. …
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It took the Treasury Department one year to announce that we
were in recession. I wonder how long it will take to announce when
we are in recovery. Assuming it will be in long-awaited hindsight,
it may be prudent to start planning now.
First it might be good to review all the things we can take
advantage of during a recession. This way if you haven’t
accomplished some of these yet you may still have some time to do
Recessions and bear markets may create opportunity for the
Tighten the budget and get your financial house in order. This
is a good excuse to postpone luxury items and improve spending
Pay down debt while interest rates are low. If your home equity
line of credit dropped from six percent to four percent and you
keep making the same payment, you are reducing principal at a 150
percent. This is a good time to eliminate consumer debt.
Consider refinancing your house if you have an adjustable rate
or if your fixed rate is greater than six percent. Recessions and
low-interest rate cycles are a good time to reduce your
Keep funding your 401k plan. If you keep your contribution the
same, you could be purchasing up to twice as many shares as you
were 18 months ago.
Go the extra mile at work and do everything you can to impress
your boss and keep your job. Take some classes, improve your
computer skills. Next month’s college graduating class is the
largest and most qualified in history and they can undercut your
Review your portfolio and eliminate anything you would not buy
again today. You may be able to realize some tax losses and you
will want to get positioned with the best strategy for a potential
recovery on your longest term assets.
Carefully research investments. I believe there are many
low-priced stocks with good multiples that may help your nest egg
recover if you can see past the next few months of volatility.
Keep your house and car in good repair. Labor and materials are
abundant and this will keep you prepared for the unexpected.
Review your tax planning for next year before you file away your
recent tax return. If tax rates remain low for 2009, and you don’t
get that bonus or raise, you could benefit from substantial tax
planning if you get started early in the year. You may be able to
reduce your withholding on the advice of your tax professional.
This can allow you to rebuild emergency savings or fund more into
Now you are ready to plan for the recovery that has historically
always happened. Stay focused on your goals and don’t let naysayers
keep you from taking advantage of the opportunities that we believe
abound. Meet with your financial advisor and prepare a strategy for
the next decade. Many analysts predict the next ten years will be
better than the last ten years.
Add higher taxes and inflation to the pot and you will need a
powerful growth strategy to stay ahead. There may be no better time
in history than now to get positioned for that future.
Patricia Kummer has been an independent certified financial
planner for 22 years and is president of Kummer Financial
Strategies Inc. at 8871 Ridgeline Blvd. in Highlands Ranch. She is
a financial consultant offering securities through SagePoint
Financial, Inc., member FINRA, SIPC, and Investment Advisory
services through KFS, Inc. a Registered Investment Advisor, not
affiliated with SagePoint Financial,Inc. She welcomes your
questions at www.kummerfinancial.com. These
views are not the opinion of SagePoint Financial, Inc, and should
not be construed as an offer to buy or sell any securities.
Investing is subject to risks including loss of principal invested.
Past performance is not a guarantee of future results.
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