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Best approach to prepare for impending recession and economic doom of the USA (lemmy.dbzer0.com)

submitted 1 day ago by [email protected] to c/[email protected]

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I don’t have much in terms of investments (401K). I was wondering if there is anything I can do to minimize the impact of the incoming recession on my financial position.

1- What do I do with my 401K? Do I keep it in the same funds or should I look into reinvesting it in different funds? 2- Should I keep an eye out for “the dip” and buy in? What? Market funds? Bond funds? ETF? 3- In terms of stocking up, what’s the best approach? Bottled water obviously, but what else? 4- I am almost done paying off my credit cards. However, I bought a new car last year. Other than looking into refinancing to a lower APR, is there anything else I can do?

Until last year, I never thought much about how to survive the many “once in a lifetime“ shitshows we are seeing and usually rolled with the punches because I mainly didn’t have the financial means to do so.

Now that I am somewhat financially capable –a privilege not many of my fellow countrymen have unfortunately– I want to try and minimize the damage that is incoming.

Any advice/suggestions would be greatly appreciated. Thank you in advance.

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[–] [email protected] 11 points 1 day ago* (last edited 1 day ago)

If you were already contributing to your 401k and into specific funds, a market upset shouldn't change much, except that your contribution buys more shares now, due to the share prices falling. I wrote this comment earlier, for a similar question in a different community.

That said, this assumes your 401k was already set up to: 1) match your risk tolerance, and 2) aligns to your investment objectives and timelines. My investment philosophy draws heavily from the Boglehead school of thought; see inline links.

Market timing -- such as waiting to "buy the dip" -- rarely turn out to be great moves, since no one can predict the future, and so no one knows where the bottom is. A dip could follow another dip, or a sudden recovery means you've lost out on gains. That's from a financial perspective, and certainly there will be other considerations such as whether the country will still be stable or socially habitable. But from a personal finance perspective, we must make choices in the here-and-now, not from speculation.

To that end, if your 401k asset allocation doesn't let you sleep well at night, then it's worth changing it up. But don't turn too many knobs at once, and carefully consider the long-term picture when doing so. Many a "black swan" event will occur between now and when you draw upon your 401k, so even short-term events can be weathered out.

As for the near term then, what should you do? Aim to be financially resilient: this doesn't mean you need to start eating ramen every day, but rather, make a plan for what would happen if any of these things happened: the car is totaled, the credit card debt gets called, a job loss, a family member is injured, an HOA assessment to fix the common roof, or the refrigerator or HVAC system breaks down.

To repeat, this does not mean going full-on off-grid prepper mode. But making a plan goes a long way. And if you're doing this, I'd suggest also making an emergency plan, kinda like an earthquake plan: where would you go if the house is gone, how would you communicate, and what resources can you depend on. Include friends, family, and allies in your planning, and exclude dependencies on any levels of government that may be unreliable.