I am terrified of this recession, please give me advice!!?

Question

I am 30 years old and this is the first recession where I've been an independent member of the work force. I am terrified. My mom says not to worry because this has happened before and the economy will recover. I don't have any debt but I am worried about my stocks and 401K, the value of my home going down. I just want to hear what other (older and wiser) people think of our economic situation.

Answer 1

This recession is going to be long and unlike anything the world has ever seen. The debt bubble is imploding. I would continue to invest for the long term. Dont worry about your home value. You live there. The home value is not important. In fact you want it to go down so you will save money in property taxes during any downturn where you arent able to afford high taxes. Keep dollar cost averaging in your 401k. Stay out of government bonds at all costs unless they return to 1983 interest rate levels (20% +). I would be, (and Ive been doing this for the last several months) putting money into silver to hedge against inflation.

Lastly to better understand what is happening you must be educated and learn what is going on. Read the following 3 books in this order.....

1 The Creature From Jekyll Island - A Second Look At The Federal Reserve by G. Edward Griffin http://www.realityzone.com/crfrjeiss.htm...

2 The Forgotten Man - A New History Of The Great Depression by Amity Shlaes http://www.amazon.com/Forgotten-Man-Hist...

3 The Exchange Artist - A Tale of High-Flying Speculation and America's First Banking Collapse by Jane Kamensky http://www.amazon.com/Exchange-Artist-Hi...

Answer 2

not every industry is affected the same way - if you stay in your house - you aren;t losing anything - just be a little more careful with spending and saving - I;ve been thru several downturns since I got out of college 27 yrs ago, including the year right after  I graduated - wish I'd followed my own advice back then. I'm much more secure now, solid company, my house is upside down too - just means I'll have to stay in it longer than I originally planned, but I was kind of going to live here until I retired in 177 months anyway - hopefully that target dae won't go out any further

Answer 3

Guess what, your Mom is right again! Don't you hate that.

People that have lived awhile find out that what goes up goes down and when goes down goes up. It is all cycles, and at your age you have nothing to worry about. Your 401k is not gonna be touched for at least 25 years, the market will go up and down numerous times in that span, don't worry, the over all trend is UP. When you are closer to retirement age you sill start to allocate some of your assets to perservation of capital, ie Bonds, but for now, be aggresive in your 401K, you have time on your side. The value of your home goes down, so what, you are living in it right? You don't have to see in this lower market right? In 5 or 7 years will it be back up, probably higher than it ever was! You have no debt, very smart, you are putting money in your 401k very very smart, you own a home rather than rent, fantastic. Listen to Mom and me, stop your worries! You sir, are sitting pretty. In case you don't believe me or your mom, look at history, reseach other economic downturns, and what happened, it all came back, bigger and better than before.

Answer 4

there have been dozens of recessions before and there will be ore in the future.

Work hard, save your money,  what went down (stocks houses)  will come back.  The more negative people are, the better things will be.

Answer 5

I am actually not older but I have been trading for many years and have been through some downturns myself. Usually its the older people that fret about recessions but in this case your mom is right not to worry. The market goes through ups and downs and its an efficient mechanism of transferring money from weak hands (scared short term traders) to strong hands (long term value investors). If you are not going to need your 401K money then you should actually be using this as an opportunity to buy more shares at lower prices so that when the market rebounds you make even more money. Look at long term charts of the DOW and notice that the best times to invest are when prices have taken a hit. The world wont end so keep investing, and if it does, then losing your 401K will be the least of you problems, so try your hardest to ride it out and you will be rewarded.

Answer 6

The economy will come back.  If you are employed, you have to make sure that there is no reason to consider you a slacker.  Make yourself useful and preoductive to your company and you will keep your job.  If business is bad, keep your eyes open and look for another job if it looks like the company is going to close BEFORE it actually closes.   You will know if that is going to happen by being observant.  

As for your investments.  It may be to late to get out of stocks.  Maybe do some repositioning if you really think this  recession will be bad into consumer staples, things people have to buy.  Housing will bottom soon, and I personally think we are close to bottom.  It may not rise soon, but if you dont move and can continue adding equity to your home, you will be saving money that way.  All houses are local, so only you can guage  your market.  Most important is  your health and well being, so don't stress too much, there can be no good from that.  tba

Answer 7

you are doing better than most people.

30 years, no mortgage, and other assets

you shouldn't worry, if you do, maybe liquidate a small portion of your stocks to cash and dollar cost average it back into your portfolio

Answer 8

It is scary, but your mom is correct.  The main thing you do NOT want to do is to panic and sell your stocks or your house.  Just keep investing in your 401(k) and stay put in your house.  The fact that stock prices are relatively low right now means that you're buying more shares, and owning more shares is always good.  

You won't need your 401(k) money for at least 30 years; so you have lots of time to weather downturns in the market.  The older (and closer to retirement) you get, the more conservative your investments should be, but you have lots of time now.  This will be a good lesson for the future.  You don't want to be heavily invested in stocks at 59 years old and go through what we're going through now because you won't have time to rebound.  That's why moving funds to more conservative investments (bonds and money market accounts) makes sense as you get older.

Regarding your house:  If you have a fixed rate mortgage that you can afford, just keep making your payments and wait for the housing market to recover.  It will happen, but it will take awhile.  Just remember that as long as you don't want to sell your house, it really doesn't matter what it's worth on paper.  A lot of people got in trouble by cashing out equity when real estate prices were going up.  It's better just to make your payments and leave your equity alone (in other words, don't worry about what your house is worth, just live in it and enjoy it).

So relax.  These things always go in cycles.