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The founder of Bridgewater Associates, one of the world’s largest hedge funds, has voiced concern that President Donald Trump’s economic agenda could lead to “something worse than a recession.”
“Right now, we are at a decision-making point and very close to a recession,” billionaire investor Ray Dalio told NBC’s Meet the Press on April 13. “And I’m worried about something worse than a recession if this isn’t handled well.”
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A recession is typically defined as two consecutive quarters of negative GDP growth. A much more “profound” change would be a breakdown of the current monetary order (it’s worth pointing out that Dalio correctly predicted the 2008 financial crisis).
What’s worse than a recession?
Trump has triggered global economic chaos with his on-again, off-again tariffs. But Dalio fears something worse — the U.S. could end up isolated as its biggest trading partners sign cross-border agreements which exclude the world’s largest economy.
“But by and large, it’s changing the world order in a way which is making it more inefficient and actually causing growth around the United States,” Dalio said during the Paley Media Council event on May 22.
The end of the Second World War ushered in a new monetary and geopolitical world order. But history tends to repeat itself. Tariffs, combined with a high level of debt and a rising superpower challenging the existing superpower, could lead to “profound changes” in the world order.
“Such times are very much like the 1930s,” he told NBC.
“These go in cycles that can be measured, and I worry about the breakdown of that kind of order, particularly since it doesn’t need to happen,” he told NBC, adding that there are better ways to restructure debt.
Whether tariffs are implemented in a “stable” way or a “chaotic and disruptive way” can make “all the difference in the world,” he said. But so far, the tariffs have been akin to “throwing rocks into the production system.” In other words, highly disruptive.
Read more: I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around
How can you prepare your finances?
If you’re an average American, how can you heed Dalio’s warning? Start by establishing an emergency fund (if you don’t already have one) that will cover at least three to six months of expenses — perhaps more, if you’re in a job that could be impacted by tariffs and trade wars.
Pay down high-interest debt (like credit cards) and avoid building up more debt if possible. If you have a great deal of high-interest debt to get rid of, consider tapping into your home’s equity through a Home Equity Line of Credit (HELOC).
A HELOC is a secured line of credit that leverages your home as collateral. Depending on the value of your home and the remaining balance on your mortgage, you may be able to borrow funds at a lower interest rate from a lender as a form of revolving credit.
Rather than juggling multiple bills with varying due dates and interest rates, you can consolidate them into one easy-to-manage payment. The results? Less stress, generally reduced fees, and the potential for significant savings over time.
LendingTree’s marketplace connects you with top lenders offering competitive HELOC rates. Instead of going through the hassle of shopping for loans at individual banks or credit unions, LendingTree lets you compare multiple offers in one place. This helps you find the best HELOC for your situation.
After you’ve taken care of your emergency fund and high-interest debt, you can prioritize saving for retirement and other long-term goals. If your budget is tight, you can still find a way to invest in your future through Acorns.
When you make a purchase on your credit or debit card, [Acorns automatically rounds up the price to the nearest dollar] and places the excess into a smart investment portfolio.
Right now, when you sign up for Acorns, you can get a bonus $20 bonus investment to start growing your savings.
It may also be a good time to diversify your investments across different asset classes to mitigate risk. That might mean adjusting your mix of stocks, bonds and other assets.
If you’re close to retirement, you might want to shift to lower-risk assets, like dividend-paying stocks. Alternative investments, such as gold and real estate, are often considered a hedge against inflation and recession.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.
If you’re an accredited investor, Homeshares allows you to gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning, or managing property.
The fund focuses on homes with substantial equity, utilizing Home Equity Agreements (HEAs) to help homeowners access liquidity without incurring debt or additional interest payments.
This approach provides an effective, hands-off way to invest in high-quality residential properties, plus the added benefit of diversification across various regional markets — with a minimum investment of $25,000.
With risk-adjusted target returns ranging from 12% to 18%, Homeshares could unlock lucrative real estate opportunities, offering accredited investors a low-maintenance alternative to traditional property ownership.
If you’re new to hedging — a risk management strategy that can help offset losses by purchasing investments in an opposite position to an existing investment — you may want to consult with a financial advisor to see how this could help mitigate risk in your portfolio.
If you have a net household income of over $200,000 per year, you might want to consider using a wealth management platform like Range.com.
Unlike traditional advisors and family offices that typically charge 0.5%-2% AUM fees, Range.com offers flat-fee pricing with 0% AUM fees, offering premium services at a fraction of the cost of traditional Certified Financial Planners.
The all-in-one wealth management platform allows those with capital on hand to get everything they need to manage and build wealth in one place — investments, taxes, real estate, and more.
You can book a free demo with the Range team to learn more about how you can build a coordinated strategy to manage your wealth.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.