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If he addressed the question, I missed it. (Yes, I read the whole article.) I get that thinking medium and long term, and ignoring the possibility of a six mo

If he addressed the question, I missed it. (Yes, I read the whole article.) I get that thinking medium and long term, and ignoring the possibility of a six month recession, is sound advice. However, given the state of the world (for instance, with Russia bringing up nuclear weapons) there are perfectly reasonable people thinking it would be prudent to expect a not-routine financial hit. So it is at the least a very misleading headline.

artemonster 5y ago
Came here to write exactly this.
throw0101a 5y ago
> Peter Lynch once said, “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.” > The same is true of recessions. > How do you prepare for one? The same way you prepare your finances for anything else. > Instead of changing your portfolio because you think a recession is coming, create an investment plan that is durable enough to withstand a wide range of environments (one of which includes economic contractions). > Give yourself a margin of safety with a high savings rate and an emergency fund not because it will help you survive a recession but because it will help you survive any number of curveballs life will inevitably throw at you. > Pay your bills on time and create a good credit score not because it will help you during a recession but because it will help you anytime you need to borrow money.
- lupire 5y ago
  > > Give yourself a margin of safety with a high savings rate If everyone does this, it creates a recession. https://en.m.wikipedia.org/wiki/Paradox_of_thrift https://en.m.wikipedia.org/wiki/Paradox_of_thrift Better to purchase durable goods (save real value, not shared delusion of money) (edit: or shelf-stable consumables), and invest in future productive capacity (backyard farm, work on your health and strength and education).
  - throw0101a 5y ago
    > If everyone does this, it creates a recession. If everyone suddenly switches from low-savings to high-savings, yes, that may happen. But if everyone consistently has a not-low savings rate, then that is the 'baseline' that the economy will base its production on. It's the sudden changes that can cause problems and not necessarily the/a steady state. Even sudden changes up can cause problems, as we've learn with supply chains when everyone switched from buying services (going out) to buying goods during the lockdown(s). Of course 'just save more' isn't an answer for some people, as the author's coworker observed: * https://ofdollarsanddata.com/the-biggest-lie-in-personal-finance/ https://ofdollarsanddata.com/the-biggest-lie-in-personal-fin...
    - nicoburns 5y ago
      If everybody has high-savings, then does anybody actually have high savings? As in, would it still be possible for everyone to redeem those savings for concrete goods and services?
      - throw0101a 5y ago
        A savings rates (of a person's income) of 15% is higher than a savings rate of 5% is higher than a savings rate of 0%. Some of those savings goes to building an emergency fund (which eventually tops out), while other savings goes into a retirement account to generate for future income; some may go into a child's education fund. Eventually most people will retire and draw down their savings. Eventually one's child will grow old and go to some kind of post-secondary school and need money for tuition, books, etc.
        gruez 5y ago
        That doesn't really answer OP's question, which is how everyone would turn those savings into goods/services. At the end of the day, the production capacity of the economy is fixed, and if there's more dollars chasing the same amount of goods, the value of goods will go up and the value of dollars will go down.
politelemon 5y ago
It's a couple of vague abstract sentences which will make sense to people who are financially savvy, but that specific target audience would already know this advice.
SkipperCat 5y ago
From my take on the article, I think you just can't think about such short term events like the impact of the Ukraine war. It's most probably going to be back to some type of status quo in one or two years, so making bets on it is more speculating than investing.
alecco 5y ago
Because it's an ad.

artemonster 5y ago

Came here to write exactly this.

throw0101a 5y ago

> Peter Lynch once said, “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.” > The same is true of recessions. > How do you prepare for one? The same way you prepare your finances for anything else. > Instead of changing your portfolio because you think a recession is coming, create an investment plan that is durable enough to withstand a wide range of environments (one of which includes economic contractions). > Give yourself a margin of safety with a high savings rate and an emergency fund not because it will help you survive a recession but because it will help you survive any number of curveballs life will inevitably throw at you. > Pay your bills on time and create a good credit score not because it will help you during a recession but because it will help you anytime you need to borrow money.

lupire 5y ago
> > Give yourself a margin of safety with a high savings rate If everyone does this, it creates a recession. https://en.m.wikipedia.org/wiki/Paradox_of_thrift https://en.m.wikipedia.org/wiki/Paradox_of_thrift Better to purchase durable goods (save real value, not shared delusion of money) (edit: or shelf-stable consumables), and invest in future productive capacity (backyard farm, work on your health and strength and education).
- throw0101a 5y ago
  > If everyone does this, it creates a recession. If everyone suddenly switches from low-savings to high-savings, yes, that may happen. But if everyone consistently has a not-low savings rate, then that is the 'baseline' that the economy will base its production on. It's the sudden changes that can cause problems and not necessarily the/a steady state. Even sudden changes up can cause problems, as we've learn with supply chains when everyone switched from buying services (going out) to buying goods during the lockdown(s). Of course 'just save more' isn't an answer for some people, as the author's coworker observed: * https://ofdollarsanddata.com/the-biggest-lie-in-personal-finance/ https://ofdollarsanddata.com/the-biggest-lie-in-personal-fin...
  - nicoburns 5y ago
    If everybody has high-savings, then does anybody actually have high savings? As in, would it still be possible for everyone to redeem those savings for concrete goods and services?
    - throw0101a 5y ago
      A savings rates (of a person's income) of 15% is higher than a savings rate of 5% is higher than a savings rate of 0%. Some of those savings goes to building an emergency fund (which eventually tops out), while other savings goes into a retirement account to generate for future income; some may go into a child's education fund. Eventually most people will retire and draw down their savings. Eventually one's child will grow old and go to some kind of post-secondary school and need money for tuition, books, etc.
      - gruez 5y ago
        That doesn't really answer OP's question, which is how everyone would turn those savings into goods/services. At the end of the day, the production capacity of the economy is fixed, and if there's more dollars chasing the same amount of goods, the value of goods will go up and the value of dollars will go down.

politelemon 5y ago

It's a couple of vague abstract sentences which will make sense to people who are financially savvy, but that specific target audience would already know this advice.

SkipperCat 5y ago

From my take on the article, I think you just can't think about such short term events like the impact of the Ukraine war. It's most probably going to be back to some type of status quo in one or two years, so making bets on it is more speculating than investing.

alecco 5y ago

Because it's an ad.