Ask The Expert
Q How do I recession-proof my personal finances?
A Whether it is market turbulence or economic recession, it is always a challenge to know how to respond when you see your investments go down in value.
What should you do now?
Review your portfolio for proper diversification. Diversification does not mean having 20 different stocks. It means having exposure to different segments of the stock and bond markets as well as some exposure to asset classes that are alternative to these asset categories. This kind of diversification helps dampen the volatility of a portfolio.
Don't let emotions dictate your response. We as investors get into trouble when fear or greed dictate the decisions we make. It often leads to do the wrong thing-selling low and buying high. Now is the time to keep adding money to your investment accounts, not to pull the money out.
Remember you are invested for long-term results. The mistake many people make is under-estimating the amount of time that their investments need to work for them. Your time horizon is not your retirement date. It is your death date. Your money has to continue to work for another 20-30 years beyond your retirement. You have more time to weather the market gyrations than you might think.
Remember: money can be made by those who stay the course and don't panic.
Camilla (Cam) Neri, a certified financial planner, began her advising career in 1980. She is a senior managing partner at Retirement Capital Strategies in San Jose, California. In 2006 and 2007, she was named one of the Top 100 Women Financial Advisors by Barron's. Cam was also named as one of the Top 100 America's Independent Advisors for 2007.
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