Dollars and Hops

042 | "How Should I Invest During A Recession?" | Money Hack Of The Week | "Should I Invest Differently In A Bear Market?"

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*This not official legal or investment advice, and this is for entertainment purposes only.  All investments involve risk.  Do your own research before making any investments for yourself*


Money Hack of the Week:

Look at your 401k, your old IRA’s, and investment accounts - figure out what funds you’re invested in and look up their expense ratios.  If you are in high-fee funds inside of your 401K, change to investment options that are low fee.

How do you do this?  Go to your 401k or IRA online, look at the positions, you will see a symbol - usually 3 to 5 letters long, pop that into google, look at the expense ratio.  What’s high? Anything over .25% is pretty high.  Some of you may be looking at expense ratios of around 1% which is entirely too high.

If that’s the case - I want you to look at your plan and the investments offered.  Some good options may be: s&p 500 fund, target retirement fund, etc…

What’s a good expense ratio? Below .10%

This 1 change can literally save you tens of thousands of dollars by retirement. If you have listened to our old podcasts - we have found that the higher the fee the fund doesn’t necessarily get you more money in retirement.  It often costs you money in retirement.

If you’re someone who invests 15k annually in your 401k, a 1 % difference in expense ratio between investment options can mean a 400k difference when you get to retirement (over 30 years)

Main Topic

We’re talking recession now - It doesn’t really matter what news source you turn on right now - everyone is talking about whether or not we’re in a recession.

Here are the latest worries:

  • Gas prices
  • Interest rates are rising
  • Housing costs rising
  • Housing affordability is a problem
  • Food costs through the roof
  • Inflation at 40 year highs
  • Crypto currency has taken a dive
  • Slowing growth
  • War in ukraine
  • Supply chain issues
  • COVID is still an issue impacting global markets - today wuhan just shut down

    • So, how do we invest if we’re in a recession?

    • Don’t panic sell
      • Selling now is the worst possible thing you can do.  You’re essentially buying high and selling low.
      • If you’re a long term investor - you need to take a longer view of things.
      • Do nothing - Did you know that fidelity just did an audit of their customer base and found that the best investors (from a return standpoint) were either dead or inactive accounts.  Meaning - you won’t beat the market.
      • Make sure your portfolio is well diversified and balanced
        • If you invest in multiple funds - are your allocations still where you want them to be?  If not, sell some of something and buy more of another to get your ratios back in order.
        • Buy more of the assets that are now on sale
          • Warren Buffet says be greedy when others are fearful
          • Don’t chase individual sectors or stocks that look “cheap”
            • Pelosi’s husband (NVDA), etc…
            • Some things will go down 50% + Just b/c you believe they’re a good deal doesn’t necessarily mean they are.  Try to stick with broadly diversified assets.
            • Millionaires are made during recessions
              • Many of the worlds most popular businesses are formed in a recession - names like Microsoft, AirBNB, GE, NetFlix, and Disney


                • BEAR MARKET GRAPHIC

                https://www.investopedia.com/a-history-of-bear-markets-4582652





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