One Thing to Do to Limit Exposure to a Potential Recession This Year

Part of one's personal finance responsibilities, besides endeavoring to create wealth, is to maintain wealth. In a downturn, many a retiree or highly levered young family get into trouble when the economy turns sour.

With equities experiencing a 20%+ drop in recent months, questions about just how far away we are from a recession are beginning to abound.

According to expert Canadian economists, the risk of a recession in 2019 have grown substantially higher of late; in fact, the risk of a recession in the near term (within the next 12 months) may be substantially higher than most think.

While it may not be the time to panic just yet, as certain indicators like an inversion of the two-year and 10-year government bonds has not yet taken place, we may be more than 12 months out from a recession. That said, preparing one's portfolio for a significant downturn, particularly at a time when the longest bull market in history has begun to fade, seems like a prudent thing to do.

Limiting exposure can start with something easy: hoarding cash. Cash outperformed more than 80% of asset classes in 2018, oddly enough.

Storing enough cash to weather an economic storm in a high interest savings account is an excellent way to protect one's money, and have the ability to take advantage of a significant market decline, buying equities as they hover around record lows, when the time comes.

Invest wisely, my friends.