Question of the Week: How Can You Protect Your Investments During a Recession?

Marcos A. Segrera, a Wealth Manager and Principal with Evensky & Katz/Foldes, shares his thoughts

The best way to protect your investments during a recession is to avoid drastic changes to your portfolio that are influenced by what markets happen to be doing in the current environment. If you find yourself in a position where you have not clearly articulated your desired outcomes, now is your chance. Rather than rely on a strategy that attempts to outguess the markets, your approach should be goal focused and planning driven. Keep in mind that, despite average intra-year drops of 14.0% over the last 42 years, the SP500’s returns were positive in 32 of the 42 years. We all know market volatility is the emotional price you pay for higher expected returns.

Additionally, here is a list of productive actions you can take when markets are not cooperating:

  1. Rebalance your portfolio
  2. Tax-loss harvest
  3. Consider adjusting your long-term allocation
  4. Take advantage of lower prices by investing more
  5. Make sure you are actually diversified
  6. Make sure you have adequate cash on hand to protect from having to tap your portfolio at a bad time

Marcos A. Segrera helps individuals, families and institutions achieve investment and financial planning goals. He also serves on the firm’s Investment and 401(k) committees. Segrera belongs to the Miami-Dade County Financial Planning Association (FPA) and works as a volunteer with the Parkinson’s Foundation and Legal Services of Greater Miami. Previously, he served as a board member of the YMCA of South Florida, an organization dedicated to building healthy, confident, and secure children, families and communities in South Florida.

SFBW Staff
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