Ten Harsh Truths About This Recession You Need to Get Used To
Ten Harsh Truths About This Recession You Need to Get Used To
The brutal reality of how your life will feel going through these uncertain times.
By Tim Denning June 8 2020
Eat. Sleep. Pee. Repeat.
That’s what my life feels like during this recession right now. It’s repetitive. We’re waiting to hear the verdict. “How bad is it, your honor?” Nobody knows — not even Warren Buffett.
Some of us already have a one-way ticket to wreck city. And some of us might actually do better because of the recession. It’s hard to tell. Everybody is guessing, even CNBC Finance.
Pausing the economy for an extended period of time and locking people in their homes has never been done before. The graphs from The Great Depression or 2008 recession may not apply to this one.
The recession is going to be tough no matter how much money you had before it all started. Having lived through the last recession, here are a few harsh truths (not financial advice).
Blaming the Recession Won’t Help You
If you get caught in the economic cyclone, blaming the recession won’t help you. It’s like blaming a fortuneteller for your future failures.
The recession hits us all and all you can do is focus on what you can control:
How you think about the recession
What you do in the recession
The effort you spend revitalizing your skills
The way you interact with others
The recession might throw you off your game, but it’s not the recession’s fault if you fall down and stay down.
Don’t Accept a One-Way Ticket to Wreck City
What is wreck city?
Gambling, speculating, followed by your worst nightmare: leverage.
I was reading the other day that more retail investors than ever are going in and out of the stock market trying to make a quick buck so they can retire. Many of these people are signing up for financial platforms that come bundled with huge amounts of leverage.
Leverage equals debt. For example, you invest $2000 into the stock market and the platform you’re using gives you $10,000 of stocks. If the stocks go up 5%, then you get 5% back on $10,000, not $2000. It’s great if your stocks go up. But if stocks do down, well, you experience the toxic effects of decay.
Decay is where the performance of your investment declines because of the expense ratio, which is higher than normal to compensate for the fact you borrowed some of the original money you invested. In simple terms, fees are eating away your investment returns.
Just because we’re in a recession, doesn’t mean you should invest money you don’t have or take big financial risks without the education to back them up. If you don’t know what you’re doing when it comes to investing, it’s a good idea to stay away from the markets or get professional advice.
Now is Not the Time to Be Complaining
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