Personal Finance Strategy - Assuming Recession 2022+

phancy on 05/05/2022 - 18:58

Hi Everyone -

Suspending our logic/belief for a second… In a scenario where we are in a recession for the next two years - what would be some personal finance advice and by extension, some reasonable investing strategies?

Here's a link to what summarises what most top-level articles are suggesting to do at the moment:
https://investorjunkie.com/personal-finance/how-to-prepare-y…

BUT - I am hoping that the OZB community has some well-thought out alternatives that goes beyond the basic nature of the advice shared. And just to pre-empt the inevitable - let's also assume that anyone reading this will talk to their own professional financial planners in conjunction of having a good chat among ourselves. So … what are your thoughts!?

Financial

Comments

  • Jimothy Wongingtons on 05/05/2022 - 19:00
    +1

    well-thought out

    Oh…

  • SBOB on 05/05/2022 - 19:11
    +1

    So … what are your thoughts!?

    BTFD?

    • phancy on 05/05/2022 - 19:23

      what assets would you particularly keep your eye on? and why?

      • SBOB on 05/05/2022 - 19:35
        +1

        my crystal ball broke long ago, so regular VDHG buys.
        why? my investment time frame isn't short term, and it suits my current research time, risk profile and 'set and forget' current mindset.

        • Stopback on 05/05/2022 - 20:35

          How do you rebalance

          • SBOB on 05/05/2022 - 20:46
            +6

            @Stopback: Vdhg………..
            Rebalance?

            How do you rebalance a single diversified index fund…the entire point is set and forget.

          • Ultimate Gattai on 08/05/2022 - 00:48

            @Stopback: I have 3 index funds and I just re-balance when I add more funds to maintain the percentages/weights I wanted, I could have gone super simple and just done VDHG, but I don't mind manually re-balance my index funds.

    • Jimothy Wongingtons on 05/05/2022 - 19:25

      No fiat left

    • Brodo Faggins on 08/05/2022 - 17:32
      +1

      Always. (profanity) the haters

  • rektrading on 05/05/2022 - 19:15

    What's this got to do with a recession?
    https://investorjunkie.com/wp-content/uploads/2020/09/shutte…

    • Chandler on 06/05/2022 - 07:55

      https://investorjunkie.com/wp-content/uploads/2020/09/shutte…

      She's tried to get money out of her purse (wallet?) and her hand turned up empty? So she's got no cash due to recession???

      • rektrading on 06/05/2022 - 07:59
        +1

        Do females carry wallets?

        It 👀 more like a 👨🏻‍🦰 wallet.

        • Chandler on 06/05/2022 - 08:01
          +1

          That's why I put that (wallet?) comment in there, since I had the same thoughts as you: it 👀 more like a 👨👛 to me.

  • enzioFirenze on 05/05/2022 - 19:20
    -1

    cash is king

    • brendanm on 05/05/2022 - 19:51

      Lol?

      • Chandler on 06/05/2022 - 07:59
        +1

        Well 📈 interest rates does 📈 the "worth" of 🤝 on to your 💲💲💲

        💎🤚✋ 🐒🍌 🚀🌙

        • brendanm on 06/05/2022 - 08:55
          +3

          Yeah, not sure if the whole 0.5% interest that banks are paying you, offsets the +5% inflation.

          • Chandler on 06/05/2022 - 09:20

            @brendanm: Just saying it increases the "worth" of holding; increased worth of holding does not mean it is worthwhile holding.

            • brendanm on 06/05/2022 - 10:32
              +2

              @Chandler: The worth of holding is being in a better position than you were previously. Holding cash in a low interest saving accounts makes you worse off than you were previously, thus decreasing the "worth" of your money.

              If today I can buy one apple for $1, my $1 is worth one apple. If I put my $1 in a saving account for 10 years, I may end up with $1.50. However, if apples are now $2 each, the worth of my money has decreased.

              If however, I invest my $1 in apple shares, and after 10 years it is worth $10, the I can buy 5 apples for what originally would only have purchased me one apple. The "worth" of my $1 has increased.

              • Chandler on 06/05/2022 - 22:00

                @brendanm: You're 💯% right ✔

                My 👉point👈 however, was that with an increase 📈 in interest rates, 🤝holding now 👇 is better ➕ than it was previously🔙.

                You're not better off, but it's not as bad as it was with the lower rates.

                • brendanm on 10/05/2022 - 17:16

                  @Chandler:

                  You're not better off, but it's not as bad as it was with the lower rates

                  No, you are still worse off at the moment. While interest rates have gone up 0.25% (which banks probably won't pass on to savings accounts), inflation has increased by 2-3% (realistically much more). So the "worth" of your money is actually being eroded quicker, despite the increased savings interest rate. 😭 times for 🫃with 💵

                  • Chandler on 10/05/2022 - 22:58

                    @brendanm: Yes, but if interest rates had not increased it would be even less worthwhile to hold your cash.

                    Again, I'm not saying it is worth holding onto cash, but interest rate rises make it more worthwhile, even if only slightly and even if it is still well an truly not worthwhile holding onto cash.

                    • brendanm on 10/05/2022 - 23:31

                      @Chandler:

                      there is a reason no other western leader backed Trump at that time, he was a loose cannon

                      Yes, but if interest rates had not increased it would be even less worthwhile to hold your cash.

                      Again, I'm not saying it is worth holding onto cash, but interest rate rises make it more worthwhile, even if only slightly and even if it is still well an truly not worthwhile holding onto cash.

                      I think you are still not getting it. Interest rate rises have been caused by the inflation. Inflation is making your money worth less. The percentage of inflation increase is much higher than the percentage of saving interest increase. Therefore, even though you have slightly "more money", the money has less worth and you are actually worse off overall, even with higher interest rates.

                      • Chandler on 11/05/2022 - 08:18

                        @brendanm: This is getting funny… I've agreed with everything you've said in regards to interest rates and inflation - it is not worth holding on to cash, and yes: inflation has seen a net decrease to the "worth" of holding on to cash.

                        But with interest rate increases, the "worth" of holding on to cash increases. In our case, these increases have been cancelled out by larger decreases due to inflation. But without those interest rate increases, cash would be worth even less to hold on to.

                        🤝💲 = 📈➖🎈

                        ⬆📈 = ⬆🤝💲
                        ⬆🎈 = ⬇🤝💲

                        ⬆📈➕⬆⬆🎈 = ⬇🤝💲

                        ➡📈➕⬆⬆🎈 = ⬇⬇🤝💲

                        I think the issue is that I said that cash was worth holding on to more due to increase rate rises, which reads as that the net "worth" of holding on to cash has increased. It hasn't, but that's due to inflation not interest rates.

        • rektrading on 06/05/2022 - 09:47
          +1

          🌟 for proper use of emoji.

    • Brodo Faggins on 08/05/2022 - 17:34
      +1

      Cash is trash 🗑

  • onetwothreefour on 05/05/2022 - 20:00
    +1

    DCA into ETFs like I have been doing for the past 12 months, I'm down now and guess it's going down further but hopefully on the other side the returns will be worth it.

  • lilyesp on 05/05/2022 - 20:16
    +2

    up down down back back foward a b a select …works everytime

  • Ozbargainite on 05/05/2022 - 20:48
    +2

    Set and forget.
    Must be time check my Onetel and Enron shares.

  • orangetrain on 06/05/2022 - 00:04
    +2

    Buy a house, it always goes up

    Worried that Australia will have a recession and rest of world won't? Then buy overseas houses!

    • rektrading on 06/05/2022 - 06:59

      A good time to buy hard assets is in a recession.

      The best time to buy is in a depression.

      • Lunarboogie on 06/05/2022 - 09:44
        +2

        This 👆🏽. As my man Warren says: when people are greedy, get scared. When they get scared, you get greedy. Seemed to have worked for him.

      • iCandy on 06/05/2022 - 20:11

        If you still have a job.

        • rektrading on 06/05/2022 - 20:13
          -1

          People that don't have work are in the wrong job.

          • iCandy on 06/05/2022 - 20:39
            +1

            @rektrading: In the 1989/1990 recession where interest rates hit 17%, a lot of people were laid off. Higher interest rates also affects employment. A lot of Ozbargainers talk about being able to cope with a few points rise in interest rates, but no one is talking about unemployment. I worked in a law firm in 1989 and we had “Black Friday” where they sacked about 50 people.

            • rektrading on 06/05/2022 - 20:48
              -4

              @iCandy: There was no Internet in 1990.

              1000s of people found work using the Internet when Rona was released to the 🌎.

    • Boogerman on 06/05/2022 - 07:51

      "Buy a house, it always goes up"
      Gawd. I could show 4 occasions in the last 20 years where house prices fell

      • rektrading on 06/05/2022 - 07:56
        -1

        What happened after the 20Y?

        The prices on prime hard assets went ☝️ to the 👉, of course.

        It always does.

      • SlickMick on 06/05/2022 - 08:16
        +1

        So 80% chance of going up in any given year? I'd take those odds.

        There aren't many investment opportunities more stable than that.

        • Boogerman on 06/05/2022 - 08:20
          -2

          I make hundreds of percent out of battery & EV mining stocks.
          Real estate. 7%. LOL. For tourists.

          • brendanm on 06/05/2022 - 08:57
            +2

            @Boogerman:

            EV mining stocks.

            How do you mine EVs? I might go dig one up rather than pay Tesla for one.

            • Boogerman on 06/05/2022 - 09:04
              -1

              @brendanm: No surprise you need it delineated…

              • brendanm on 06/05/2022 - 16:22

                @Boogerman: It is a surprise that a greens voter is investing in lithium mining. It's not a surprise that you think you can mine an ev.

                • Boogerman on 06/05/2022 - 16:47
                  -1

                  @brendanm: Dear, oh, dear. Its no surprise a conservative voter needs things spelled out to them

                  • brendanm on 07/05/2022 - 10:17
                    +1

                    @Boogerman: Its hilarious that you can't figure out who I would vote for 😂

                    Also, it's you who said "ev mining", not me.

          • SlickMick on 06/05/2022 - 10:33

            @Boogerman: Fantastic. 16 years out of every 20?

      • brendanm on 06/05/2022 - 08:55

        No you can't, you tried to in the other thread, and failed on the most part.

        • Boogerman on 06/05/2022 - 09:09
          -1

          The general impression is that house prices always rise. In fact, prices slowed or contracted during the 2001-5 property finance collapses, the 2008-9 GFC and the 2010-11 sovereign debt crisis. More recently, prices were also brought down by government-imposed lending curbs, first in 2014-15 and then in 2017-18.
          https://www.firstlinks.com.au/house-prices-surge-falls-commo…

          You did pass high school didn't you?
          Cause you don't need a tertiary education to grasp a graph.

          Oops, my bad. Its actually the cognitive dissonance borne from the realisation that you've swallowed the property fanfare

          • SlickMick on 06/05/2022 - 10:59
            +1

            @Boogerman: lol price slowed… contracted…. brought down, but apart from that increased, yeah?

            I had a look at every property I'd ever owned: the value has increased by a total of $1,822,500.
            Average increase of 7.51%pa.

            I'mwould be quite happy with a stable 7%pa rather than gambling on the stock exchange (If I'd had been able to keep them all)

            • Boogerman on 06/05/2022 - 13:22

              @SlickMick: But, but, but, prices always go up!!
              Stock market>>>>>real estate, especially over the next 10 years

              • SlickMick on 06/05/2022 - 15:22
                +1

                @Boogerman: Especially. But this conversation is about you suggesting that property prices falling 4 years out of 20 is a bad thing.
                Now you're changing your story to average over 10 years.

                Yeah, I would hope stocks would outperform property in the long term, coz they're a whole lot riskier - you can't count on 16 increases out of 20

                • Boogerman on 11/05/2022 - 06:52
                  -1

                  @SlickMick: "property prices falling 4 years out of 20"
                  So finally you acknowledge property prices fall.
                  Bravo. Dear, oh, dear…..

          • brendanm on 06/05/2022 - 16:21
            +1

            @Boogerman:

            The general impression is that house prices always rise

            Zoom out on the graph mate. What direction does the little line go? Hint: it goes up, and to the right. That means that overall prices have increased over time.

            • Boogerman on 06/05/2022 - 16:48
              -1

              @brendanm: Bravo. You pass, what, year 6 maths?

              • brendanm on 06/05/2022 - 17:25
                +1

                @Boogerman: Obviously did better than you, with your "but it dropped 3 times over 20 years" rhetoric.

                Not sure how you harp on about shares, share markets have dumped often, but you know what? They also go up to the right, same as real estate. It's almost like their is a finite amount of land or something. Weird.

                • Boogerman on 07/05/2022 - 07:27
                  -1

                  @brendanm: NASDAQ is down 24% in the last 6 months
                  Oops, my bad. I didn’t ‘zoom out’ to 5 years. All the market statements about being ‘in correction territory’ is just not taking in the 100 year picture!
                  Amirite?

                  • brendanm on 07/05/2022 - 10:15
                    +1

                    @Boogerman: So are you worried about the stock market dropping as well? Or just fixated on real estate for some reason? Things can go down, but historically, they always go back up, sorry, but I fail to see what your issue is.

                    • rektrading on 07/05/2022 - 10:31
                      -1

                      @brendanm: It's always good to see the $XJO take a 👍 💩 once in a while.

                      ETF need a reality check every now and then.

                    • Boogerman on 11/05/2022 - 06:50
                      -1

                      @brendanm: Gawd, you really need things spelled out, don't you?

                      • brendanm on 11/05/2022 - 06:52
                        +1

                        @Boogerman: Gawd, you really don't make sense with your whining do you? Whine that real estate can go down, while also acknowledging that the stock market can go down, but not whining about that, because that's ok.

                        • Boogerman on 11/05/2022 - 06:55
                          -1

                          @brendanm: "No you can't, you tried to in the other thread, and failed on the most part."
                          Once again:
                          https://www.firstlinks.com.au/house-prices-surge-falls-commo…
                          According to you, there are no points on the graph were the line falls.
                          Ugh.
                          Cognitive dissonance from home ownership?

                          • brendanm on 11/05/2022 - 07:14

                            @Boogerman: Please read my posts from the other thread, it's all explained there for you. Please also understand what " for the most part" means.

                            Please also understand that, like the stock market, property can also have a downward point, however, like the stock market, it's general trajectory is upward, hence my suggestion to "zoom out". There is limited land, unlike the Australian dollar, we can't just print more to give to the "underprivileged".

                            Do you panic and sell your shares every time they drop 1%?

                            Cognitive dissonance from home ownership?

                            I own a house for the security of home ownership for my family, if the price halved, I couldn't actually care less. In saying the market value of it is +95% what I paid 5 years ago, and while my mortgage cost has gone down, the cost to rent has gone up.

                            • Boogerman on 11/05/2022 - 07:57

                              @brendanm: "…"property can also have a downward point…"
                              Backpedal any faster & you might trip over yourself

                              • brendanm on 11/05/2022 - 12:24

                                @Boogerman: As I said, read the other thread again. I'm not repeating the same shit over and over because you can't wrap your head around long term trends.

                                • Boogerman on 11/05/2022 - 12:37

                                  @brendanm: Maybe you should recommend someone buys that $2M house right now, because hey, even if it falls $600K it will end up higher…….eventually! 'Zoomed out' 'long term' view & all that!

                                  • brendanm on 11/05/2022 - 14:31

                                    @Boogerman: As I said in the other thread, have a look at how much prices dropped, and how long it took to go back up. I'll give you a hint, not much, and not long.

      • Lunarboogie on 06/05/2022 - 11:47
        +2

        Bro, no one is suggesting the price is linear. There will be ups and downs but over time, house prices have risen.

  • Jason Genova on 06/05/2022 - 11:56

    im tipping depression

    check back on this comment in a couple years

  • iCandy on 06/05/2022 - 20:09

    During the 1989/1990 recession where interest rates hit 17%, many people lost their jobs and unemployment was high. As interest rates rise, bosses sack workers because consumers also buy less. Higher interest rates and inflation has employment effects as well. Thoughts?

  • ALesha77 on 07/05/2022 - 01:14
    -2

    Not a financial advice.

    Right now I would go into gold and precious metals ETFs and miners - stellar performance is not likely but it will keep your money's worth real purchasing power.
    As soon as OIL will start falling (will hold below 94-95) - reallocate part into base metals and electric battery-realted metals (miners, producers).
    Agriculture ETFs (grains) is a good choice but you need to keep an eye on the war in Ukraine - it will probably start falling as soon as some kind of truce will be in the cards
    Energy - a bit late now, I think that large players are handing over their positions to retail now.
    Tech, Discretionary, Comms sectors will probably stay in a dog-house for a while.

    And I would NOT touch with a broomstick anything long-duration and especially sensitive to real interest rates - residential real estate, crypto, bonds and treasury notes. Any credit notes are at risk now. Money will become tight and tighter and we might see some spectacular rug-pulls.

    • Boogerman on 07/05/2022 - 07:20
      -1

      “As soon as OIL will start falling (will hold below 94-95) - reallocate part into base metals and electric battery-realted metals (miners, producers).”
      Battery & EV mining stocks have already skyrocketed over the last 2 years regardless of where oil was at

      (Some people are literally too stupid to understand what is meant by ‘EV mining stock’ so can encapsulate what that means if required)

      • ALesha77 on 07/05/2022 - 16:05
        -1

        I think you need to invest some time into your value chain analysis.

        Most miners have been in a doghouse for the last few quarters as they are energy and labor intensive business. With oil skyrocketing and labor force squeeze they have been in a cyclical downtrend. So I am surprised with your "skyrocketing" statement about miners. Can I bother you with pointing to a dozen of lithium, cobalt, nickel miners that have skyrocketed this year?

        The "green-washing" nonetheless will continue as a secular trend and the cost pressures on these miners will abate with oil falling, hence my view.

        • Boogerman on 08/05/2022 - 06:51

          I stated 2 years, not 4 months

          • ALesha77 on 08/05/2022 - 11:55
            -1

            @Boogerman: Then I am not sure if I see any relevance of your response to my comment about current state and future projections based on secular and cyclical changes.

            • Boogerman on 09/05/2022 - 07:56
              -1

              @ALesha77: I even quoted you to highlight how poor your logic is.
              Oil prices will have negligible effect on the transition to batteries & EVs - because its inevitable. In fact, the change will accelerate once it becomes culturally frowned upon to support polluting activities & hence governments will plow trillion$ into the transition, bringing production mining operations on line faster than the typical 5 to 10 year lead time. It will accelerate further as boomers & silents progressively (pun intended…..) die off.

              • ALesha77 on 09/05/2022 - 22:56
                -1

                @Boogerman: And I am afraid your logic is way off.
                From the very first post I am quoting oil price as an INPUT COST to the miners, and not as an alternative to EV (like apples and oranges).
                And for some reasons you keep insisting that oranges are better.

                I can only suggest you read about value chain analysis before getting into the argument any further.

  • rektrading on 09/05/2022 - 11:56
    -1

    Gn frens,

    Breaking news

    XJO damp.
    https://ibb.co/h8bYYyN

    Enjoy.

    • Brodo Faggins on 09/05/2022 - 20:52

      Didn't even try to hold support - Short that shit to infinity & beyond 🚀

    • johnwinkle on 09/05/2022 - 21:12

      wouldve been rich shorting btc instead of trying to ramp it for months

      • rektrading on 10/05/2022 - 07:48
        -1

        I don't short #Bitcoin. It's foolish.

        • johnwinkle on 10/05/2022 - 13:20

          xjo down 9% from ath, btc down 60% from ath yikes

          • rektrading on 10/05/2022 - 14:12
            -1

            @johnwinkle: It doesn't take much for it to damp -20.0% from ATH.

            4 weeks of bad news will do the trick.

  • rektrading on 10/05/2022 - 07:45

    The XJO got 👊 by the pain 🚂 on Monday and is coming back for more.

  • daft009 on 10/05/2022 - 08:34

    Time in the market.
    Not timing the market

    I'm sticking to my monthly purchase of ETFs

    And that article…stating the obvious much

  • Gros21 on 20/05/2022 - 09:15

    Throw all available money into ETFS every pay day (keeep a small kitty as emergency) if need be i have a 10K Credit card, I just transfer fund to pearler and it automatically buys VDHG in my case.

    Now would also be a good time to look into your super investments, If you think market is going to crash put it in a safe option, for me growth all the way.

    What happens happens but cash is generally a average investment at best.

    • SBOB on 20/05/2022 - 17:44

      fund to pearler

      Mind if I ask why pearler?
      I currently have a vdhg managed fund, direct with vanguard but have wondered if I should compare fees for in or out of direct vangaurd (I'm was on their old platform so I think my account has lower fees than a 'new' vanguard personal investment account)

      • Gros21 on 21/05/2022 - 03:46
        +1

        Cause it's rather simple to use
        I pay 4.33 in fees (pre paid you can't get this now)

        I can autoinvest I simply deposit money every fortnight and never login to pearler. My sharesight account is synced up.

        If I want to purchase other shares I can

        While I think it's very basic, not ideal for day trading for growing portfolio it's great. Like coinspot

        Stake and CMC also get good wraps.

        Just make sure it's chess sponsored meaning they buy shares in your name and not just hold them on your behalf.

        I get letters from vanguard every 2 weeks when I purchase them.

        But pretty much pearler is idiot proof and easy to use.

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