Recession investing

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If you are approaching retirement and have actively been investing, you would probably have been concerned if your portfolio statements show your nest egg decreasing in value due to the downturn in financial markets. As my colleague Dwayne mentioned last week, economists and analysts are predicting that a recession is likely to occur this year. This is a major concern for investors who are on the cusp of exiting the workforce, but to quote Winston Churchill, “Let our advance worrying become advance thinking and planning.”

Many soon to be retirees are faced with the reality that their living expenses may outpace their savings or investments. Recession and high inflation forces us to spend more to maintain the same lifestyle. Without a steady stream of income, one wonders how they can actively combat this.

My first recommendation would be not to panic sell. It is never recommended to sell in a dip. If you must liquidate a portion of your portfolio, try to sell only what is necessary. Remain focused on your financial plan and investments that you have made. While the immediate future may not look bright, your efforts were not for naught. Market volatility is a part of the investing cycle. History has shown us that markets will recover.

Secondly, if possible and if necessary, rebalance your portfolio. Include instruments that are less risky in times of volatility. Volatility often presents an opportunity to purchase high-credit quality instruments at a discount. You may add these instruments to your portfolio in the downturn and lock in favourable yields which will boost your portfolio in your retirement years.

If you are going to restructure and take advantage of the dip in prices, include stocks and bonds from companies that have a history of solid performance during an economic downturn and a favourable track record of paying dividends and coupons. While the value of the stock or bond may fall, the income earned from dividends will benefit you in the retirement years. Note that, historically, bonds tend to outperform other asset classes in a recession.

Remember that there is no shame in missing certain opportunities. While being strategic is key, do not deplete all your cash reserves during a recession. Depleting your emergency fund and investing it all is not recommended.

Be mindful of your retirement goals, do not make rash decisions that can jeopardise the plans you have in place. Always be mindful of your risk tolerance and your exposure when determining your goals. Consider your time horizon to official retirement and always seek the advice of a trusted financial advisor to guide you.

Christine Rankine is the manager – personal financial planning at Sterling Asset Management. Sterling provides financial advice and instruments in US dollars and other hard currencies to the corporate, individual, and institutional investor. Visit our website at

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Christine RankineADRIAN CREARY