05/24/2022
Recession Preparation
1ļøā£ Stress test your cash needs against a job loss, variable compensation reduction, or no bonus.
2ļøā£ Sure up emergency cash, have at least 6-12 months of all core living expenses and debt service payments.
3ļøā£ Secure financing- if you were thinking about a home equity line of credit or any type of loan, put them in place now. Asset valuations may fall, banks may slow lending, you may lose your job.
4ļøā£ Review your riskiest equity assetās balance sheet and determine if you still think they can survive a prolonged downturn.
5ļøā£ For rental properties, have a contingency plan for receiving zero rent. How will you service your debt?
6ļøā£ Stress test your retirement income for a bear market if you retired last year, this year, or planning on it next year.
7ļøā£ Set aside opportunity cash for distressed asset purchases.
8ļøā£ For stocks, create a shopping list of companies with beautiful balance sheets you want to own with a target entry point significantly below fair market value for a margin of safety. Remove the emotion.
Always remember, the wealthy donāt fear down markets, they profit from them.
True wealth is built in down markets.
