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Recession fears have dogged Americans since the Covid years, and they’re showing no signs of stopping.
In March, J.P. Morgan’s chief economist said there’s a 40% chance the U.S. will face a recession in 2025. Veronica Willis, global investment strategist at Wells Fargo Investment Institute, says that whether a recession is coming or not, the economy is already in a “slow patch.”
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Now, with a rocky stock market, President Donald Trump’s tariffs and weakened tourism, the U.S. may be on the verge of an economic downturn.
And while many Americans may find this concerning, there are ways to protect yourself and your investments from volatility. Below are three strategies for keeping your bank balance in the black and ensuring your investments are stable.
Adjusting your investment strategy
Now more than ever, it’s important to ensure your portfolio is properly diversified.
Too much exposure to the stock market could mean significant losses, a thing you especially want to avoid if you’re nearing retirement. Even in times of economic prosperity, retirees should look to trade in the bulk of their stock options for safer investments such as bonds, high-yield savings accounts and inflation-protected securities.
Seth Mullikin, a certified financial planner in Charlotte, North Carolina, told USA Today that retirees “do not want to be withdrawing from an aggressive portfolio during a recession.”
Meanwhile, if you have decades before you retire, you may want to ride out the storm.
“The fact that the stock market is down 7% or 10% now isn’t so concerning,” Sean Higgins, an associate professor of finance at the Kellogg School of Management at Northwestern University, shared with USA Today on April 3.
In fact, this might be an opportunity to buy up stocks that are selling low but have growth potential for the future. It’s “a great time to buy stocks because you’re getting them at a discount,” says Willis.
Even small amounts can grow over time with tools like Acorns, a popular app that automatically invests your spare change.
Signing up for Acorns takes just minutes: link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. With Acorns, you can invest in low-cost ETFs with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to your investment.
In the meantime, make sure you’re also diversified with commodities like gold, which has been a strong player in these last few years of economic volatility.
Consider opening a gold IRA to take advantage of the tax benefits of this “safe haven” investment.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Thor Metals.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining 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 $20,000 in free metals on qualifying purchases.
Reducing debt and expenses
According to LendingTree, the average interest rate for a credit card in the U.S. is 24.2%. If you are carrying a balance on any of your credit cards, now is the time to put a plan in place for paying off those debts.
During a recession, paying down debt and reducing expenses is essential. If you don’t already have a budget and a spending tracker, now is an excellent time to put these measures in place.
If you’re struggling with multiple credit cards and high-interest debts, one way to start regaining control is by 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.
While you’re in the process of budgeting, don’t forget to review your fixed expenses like monthly bills, insurance and car loans. Set aside the time to call providers, like your cell phone and internet companies, and ask for ways to reduce your monthly bill. You might also shop around for better insurance coverage for your home and auto.
One option for finding cheaper coverage is OfficialHomeInsurance.com, where you can find the lowest rates on your home insurance for free.
In under 2 minutes, OfficialHomeInsurance makes it easy and convenient to browse offers tailored to your needs from a list of over 200 reputable insurance companies.
Simply fill in a bit of information and quickly find the coverage you need for the lowest possible cost. You could save roughly $482 a year!
You can also use OfficialCarInsurance.com to ensure that you’re cutting your insurance costs down to size, and keeping them within the scope of your budget.
Getting started with a quote is easy: When you enter your age, your home state, the type of vehicle you drive and your driving record, OfficialCarInsurance.com will sort through the leading insurance companies in your area, including top providers like Progressive, Allstate and GEICO.
The process is 100% free and won’t affect your credit score — guaranteed.
Finally, it’s a good time to question whether you can opt for a cheaper car. The average loan for a new car is $735 per month, according to data from Experian. If you can opt for a second-hand car or lease a less-expensive model, you could trim thousands of dollars from your budget.
Building an emergency fund
Lastly, whether you have a large portfolio of investments or you’re living modestly, it’s important to set aside funds for a rainy day.
An emergency fund is crucial for financial health, as it prevents you from going into debt when unexpected expenses arise. The popular wisdom is that you should have six months’ of expenses saved, but even a couple thousand dollars is a good start and can prevent headaches down the line.
If you don’t have an emergency fund, one of the best ways to begin saving is to set a monthly goal and put the funds in a high-yield savings account, where the money can grow and keep up with the rate of inflation.
For example, you can open a high-yield checking and savings account with SoFi and earn up to 3.80% APY Plus, SoFi charges no account, monthly or overdraft fees.
The best part? You can get up to $300 when you sign up with SoFi and set up a direct deposit.
According to a report from Bankrate, 27% of Americans don’t have an emergency fund. Today is a great time to begin to get your financial health back on track.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
