It seems like every other week, there are rumblings in the financial media about a recession.

I’m not here to talk to you today about whether or not there’s going to be one (my crystal ball is still in the shop.)

The truth is – when it comes to the future, there is very little we can predict, let alone control, when it comes to what markets will or will not do.

This is why I want to talk to you about a true way to recession-proof your investment strategy. Here are three things you can - and should - focus on, in order to recession-proof financial future.

Thing #1: Asset Allocation

Allocate your investments across a diverse mix of stocks, bonds, cash and real estate. Be sure to include stocks of large companies, small companies, medium sized companies, and so forth in your portfolio.

Thing #2: Reflect on Your Time Horizon and Your Goals

What’s the goal of your current investment strategy? Really think about this. Is the money you’re saving for you to spend? If so, when? How much will you spend, and over what period of time? The longer until your nest egg is spent down, the less impactful a recession might be.

(For any funds earmarked for short-term spending [think: anywhere between several days from now and a year from], less risk is best. We just don’t know what the markets are going to do in a 1 year time frame, so it’s not worth chancing it. Keep money you know you’re going to spend in a safe, liquid place such as a savings account, checking account or short-term CD.)

Thing #3: Focus on The Positive

Let’s face it: financial media is often speculative, doomsday-esque, and generally unhelpful. Experts often do a very poor job of predicting the future of the economy and companies, especially in the short term. Do yourself a favor and take a moment to reflect on what you’ve accomplished so far. The markets may have helped get your portfolio to where it is today, but the real elbow grease came from the hard work you put into saving. Pat yourself on the back!

And that’s it! You now have the keys to a recession-proof investment strategy.

“Wait a minute – what?” you say. “You don’t tell me anything I haven’t already heard about investing!”

Okay, you got me – my apologies for inflicting clickbait on you.

Economic and market cycles have both good and bad times. Sometimes people get really excited for no good reason, and sometimes they get really down for no good reason.

Usually, things are somewhere in the middle. Markets don't always go in one direction (although overall, they tend to go up over time).

If you want to know when to invest or sell in the stock market, let me advise you that timing the market is a very risky and unwise strategy.

If you decide when to get it, you must decide when to get back in.

It’s possible you might get lucky and time getting out just before a market correction.

But it’s possible you might get equally unlucky a month later and miss the stock market rebound of the year.

And missing the best days of the market is costly. The chart below is proof.

“Why don’t I just get out of the market altogether?” you might think.

This is a surefire way to avoid the volatility of markets. This is also a surefire way for your money to lose purchasing power.

Finance 101 tells us that a dollar today is worth more than a dollar tomorrow. Shocker: stuff costs more over time.

Even though bank CDs are considered safe, inflation can still erode their value over time when compared to a moderate stock portfolio.

To succeed in investing, focus on things within your control and take action. Successful investors know they can’t control the market, and it's how they have historically achieved success over time.

Past performance is not a guarantee of future results. The hypothetical example assumes an investment that tracks the returns of a S&P 500® Index and includes dividend reinvestment but does not reflect the impact of taxes, which would lower these figures. “Best days” were determined by ranking the one-day total returns for the S&P Index within this time period and ranking them from highest to lowest. There is volatility in the market and a sale at any point in time could result in a gain or loss. Your own investment experience will differ, including the possibility of losing money. Source: AART, as of 12/31/2022.

The S&P 500®, a market capitalization–weighted index of common stocks, is a registered trademark of Standard & Poor’s Financial Services LLC, and has been licensed for use by Fidelity Distributors Company LLC. All indexes are unmanaged, and performance of the indexes includes reinvestment of dividends and interest income, unless otherwise noted. Indexes are not illustrative of any particular investment, and it is not possible to invest directly in an index. Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money. Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

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