The last recession ended in 2009, and investors remain confident that the chances of experiencing another one in 2019 or 2020 are slim.
By July 2019, the U.S. economic expansion will be the longest on record. Things may slow down, but there’s no need to worry about a recession. Rising wages, falling unemployment rates, cheap gasoline, and optimism about the trade war between the United States and China will continue to prop up the economy throughout this year.
The best time to prepare for a recession is when the market is strongest, however. Having a resilient portfolio will help to minimize losses. Keep in mind that Treasury bonds are the best-performing asset during a recession, so investors see these as a safe place to stash their money.
For those who want to invest smaller amounts of money over time, preferred stocks are a good choice. They have both debt and equity components, stable prices, and usually pay dividends. No matter what happens, it’s important for investors to avoid having a knee-jerk reaction to the markets. Fear should never be a motivating factor. While it’s tempting to scale back at the beginning of a recession, it’s smart to think long-term and keep a portfolio asset mix based on risk tolerance.