Wealth Column: 'Recession proof' investing

Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings.
Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings.

Recession. Let’s call it what it is. It’s not “the R word.” It’s not a “rough patch.” It’s recession and, per the National Bureau of Economic Research, it is here.

In every economy, there are periods of growth and periods of recession, defined as two consecutive quarters of economic downturn. They are an inevitable part of the market cycle. Your retirement plan must have your prepared not only for the possibility of a recession, but to maximize the value of your investments when one arises.

Look at your overall goals

Let’s start by thinking about why and how we invest in the first place. Fundamentally, we invest because we have a source of income now and we know we will need a source of income in the future. A recession doesn’t change that dynamic. We don’t have the luxury of putting our investments on hold while we see what the market does. That is a recipe for failing to meet our retirement goals.

How do we invest? The adage is buy low and sell high. In order to buy low, there has to come a time when assets are relatively affordable. A recession is one of those times.

Don’t abandon the fundamentals

In any recession, there are stocks that still perform well. Stocks that pay reliable dividends, core sector stocks, real estate (especially while interest rates are low) are some of the possibilities to consider with your adviser. The fundamentals are still the same. Quality companies with strong management and a long-term growth strategy make for strong investments. Now is obviously not the time to be taking major risks.


More than any particular asset, however, you want an investment portfolio that allows you to have the most money when you need it. Now that the markets have recovered a lot of their early COVID-19 losses, this might be a good time to look at your asset allocations.

Regardless of market conditions, the tax man awaits. Making sure you have proper tax diversification, in addition to asset allocation, will help you avoid a crushing tax bill in retirement. A mix of taxable, tax-deferred and tax-advantaged investments should always be your goal.

But there is more than just asset and tax diversification. With increased economic uncertainty, it is important to have company diversification, as we all saw when Lehman Brothers collapsed in 2008. Again, this is no time to have all your eggs in one basket.

The time to act is now

There are tools at your disposal to mitigate the short-term impacts of a recession. Tax-loss harvesting, for example, allows you to offset your capital gains tax liability. In fact, this is one circumstance in which you can make market volatility work for you, by “banking” losses to offset future gains as markets recover.

In a recession, it might be tempting to question your advisor. Why didn’t they warn us?

Advisers can’t control the weather. They can’t tell you when exactly it’s going to rain. But they know rain is going to come and a good adviser will tell you to carry an umbrella. Your adviser can’t promise gains, but their expertise on how to navigate market volatility is more important during a recession than at any other time.

So take some a deep breath. Say it out loud. And so something to make sure your investments are protected during this recession.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on News Radio 830 WCCO on Sunday mornings. Email Bruce and Peg at Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment adviser. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL.
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