Recession Proofing Your Life: Common Sense Money Management for Everyone
In other words:. The former reflects the cold, hard reality of the business. The latter reflects the often-fickle emotions of investors. When sky-high expectations are reflected in a stock's price, it will suffer during a recession. It really doesn't matter if the company is growing or not. When investors get scared -- as they always do during a recession -- stocks with astronomical expectations will suffer unduly. That's why all five of the stocks I've selected have modest -- at best -- expectations baked into their respective stock prices.
Just as importantly, during the three years beginning at the onset of the last recession, all five of these companies had stocks with positive returns that outperformed the market. There's an important caveat about investing in recession-proof stocks: They probably won't have the highest returns. It's true that investing in recession-proof stocks can limit your downside the amount of money you might lose , but it also limits your upside the amount of money you might gain.
In other words, while recessions can have a scary effect on the prices of your stocks, they don't last forever. Here's a look at a comparison over the last 10 years of a basket of small growth stocks orange line and the largest companies in the United States blue line. By investing in recession-proof stocks, you are trading the possibility for higher returns for the safety of limited losses.
The first are those who cannot emotionally tolerate the reality of major drops in stock prices. This can include investors of all ages and stripes, and it largely depends on your own appetite for risk. One of the great benefits of investing is that it forces you to be honest with yourself. Not only would you be ill-suited to deal with the emotional stress of a downturn -- it could have a terrible effect on your returns. Often times, selling your investments can be the only way to soothe these nerves.
You can't lose any more once you sell -- or so you think. In reality, you have "locked in" your losses by selling at market lows, and you'll be unable to enjoy any upswing that follows. This tends to be a more distinct group mostly comprised of those nearing or in retirement.
Get PDF Recession Proof Your Money, Stress Proof Your Life
While no money that you need in the next three years should be in stocks, it's still prudent for those in their golden years to focus on recession-proof stocks. Hopefully, you already have the nest egg you need by age Once you do, you'd want to focus more on maintaining and slowly replacing your withdrawals than growing your nest egg. Having cleared up all of these details, let's focus on why these five companies are great recession-proof options for your own portfolio.
The company also has a burgeoning e-commerce operation. Because of the company's scale, it can negotiate the lowest possible prices from suppliers and pass those low prices on to customers. During a recession, that can be a huge boon: People know they likely won't find prices lower than what they'll get at Walmart. During the last recession, that's how things played out. Data source: Yahoo! Cash includes long- and short-term investments. Payout ratio calculated from free cash flow.
As a result, this reflect's Wal-Mart's price to free cash flow. While some might be worried about such a heavy debt load, Walmart's free cash flow shows just how strong the company is. If it wanted to, it could retire most of that debt in short order. But there are better uses for that money -- like paying out a modest dividend and growing it over time.
With only one-third of free cash flow being used on the dividend, there's lots of room for it to grow in the future. Just as importantly, there aren't ridiculously sky-high expectations baked into Walmart's stock price. With a price to free-cash-flow ratio of just 16, investors are expecting moderate growth from Walmart. That makes sense, given the company's size. But I think investments in e-commerce and a stake in Flipkart -- India's leading e-commerce player -- give investors reason to be excited about Walmart whether or not there's a recession in the future.
The authors found that:. Altria is the parent company to the uber-popular Marlboro brand as well as several discount brands. Cash includes long and short-term investments. There's little doubt about the overall trends in the United States: Fewer people are smoking. But it hasn't really put a damper on Altria's results because the company has been able to bump up prices just as quickly as people quit smoking, leading to superior results.
5 Recession-Proof Stocks to Buy in | The Motley Fool
Because there are minimal capital expenditures, the power of Marlboro's brand is paramount: Altria spends the same amount of money making the cigarettes, but it has shown an ability to continually raise prices while not losing customers because of it. If the next recession were to hit tomorrow, you can be sure that smoking rates would rise, and Altria would be one of the top beneficiaries. Put together, this robust juggernaut should fare well in the face of a recession.
The consumer segment is relatively stable -- though a recent controversy surrounding asbestos may hamper that. Even if that's the case, though, the pharmaceutical division has been very strong. Those grandkids are only going to be young for so long. Which is why the most important thing you can do is to set your retirement accounts up so that you can weather any storm.
How to Recession-proof Your Life and Money | DailyWorth
Whether you follow the above religiously or come up with a variation on your own plan, remember that your life cannot be put on hold if the market tanks. John E. Share to facebook Share to twitter Share to linkedin. Great stories about real people who are side-giggers to relate with. However, all you get will be stories and the personal journey of the author's side gig business. Tips and advice are good but nothing exceptional.
- 5 Recession-Proof Stocks to Buy in 12222.
- A 10-step guide to recession-proofing your finances?
- UNIT 3 Adult Learning 101: How to Implement Adult Learning Theory into your Online Classroom: UNIT 3 Motivation and Instructional Strategies (Adult Learning ... Learning Theory into your Online Classroom).
- Recession Proofing Your Life: Common Sense Money Management for Everyone.
- A 9-Course Guide to Recession-Proofing Your Finances | StackSocial.
Also, worksheets for The Economy of You are available through her website by subscribing Kimberly Palmer did a great job with this book. Oct 26, David rated it it was ok.
Not the book I was expecting. I checked it out at the library with other books because I was looking for some good business books to help me make a transition in my career. After the first 50 pages, I realized it was more on entrepreneurship than leveraging strengths.
- Anjo da cara suja (Portuguese Edition)?
- How to Recession Proof Your Personal Finances and Investments in Three Steps?
- Recession-Proofing Your Life Insurance.
- Healthy Finances: Recession-Proof Your Life - Shape Magazine | Shape!
- ReViewing Chess: Scandinavian, 2...Qxd5 3...Qd6 and 3...Qd8, Vol. 175.1 (ReViewing Chess: Openings)?
Palmer does a good job outlining ways to develop your home business, a side gig and other tools to help you launch your own business. She quotes many great authors and examples most of which I have already read their works or Not the book I was expecting. She quotes many great authors and examples most of which I have already read their works or heard their examples in other sources like podcasts. Her writing style is professional, but didn't draw me in just my personal preference.
Lastly, she used the example of Tom's Shoes. Other than being in so many business books, I found in my research that Tom's Shoes has great intentions, but hurts more than it helps. The free shoes they are giving to people is a short term help that creates a long term crises. This is because it actually destroys the local cobbler businesses see "Poverty Inc.