Let's Say There's a Recession in the Next 2 - 4 Years, What Should I Do to Prepare?

[JesseJ]

2008 was a long time ago, but forgetting the past only means we're destined to repeat it. 

Not to be all DebbieDowner, but if we agree all good things must come to an end, and that economic cycles are cyclical, then it feels like a recession may be looming on the distant horizon. 

If that's the case, what's the best way to prepare (beyond saving as much money as I can)? Anyone have any tips/tricks to share? Anything they learned previously they plan to apply to this next cycle? 

[Carl]

Do what I did prior to 2008. Save cash out the yaazoo. THen when the recession bottoms out, buy mutual funds out the yaazoo. I've made a killing just over the last six months, and have only pulled less than 5% of my 2008-2012 investments.

Personally, I don't see any chance of a recession that will matter, until sometime after 2020 at the earliest. Yeah, we'll have a few mini-drops and that's normal. But the earliest I see the next "big one" possibly coming, is after 2020. I won't get into any political discussions of why I see it that way, as that is not the purpose and intent of this public form.

[JesseJ]

1. Thanks so much for the prompt reply

2. I always appreciate a dry powder strategy! And since we're here... any thoughts on mutual funds vs. ETF's? Whenever I attempt to parse the two my eyes start to glaze over. 

Thanks so much @Carl!

[Carl]

You *really* need to meet my friend Dave Ramsey. It will be the best and most lucrative $125 you will ever invest in your lifetime. Here's a quote from him, copied from his page at https://www.daveramsey.com/askdave/investing/exchange-traded-funds-as-investments

QUESTION: Charles on Facebook asks what Dave thinks of an exchange-traded fund (ETF) as an investment device. Dave explains what it is and why he doesn’t like it.

ANSWER: The main reason to do an ETF is that it allows you to trade your stocks or trade your mutual funds easily and often. I don’t believe in that strategy. That implies you are trying to time the market, and you’re trying to buy things at the low point and ride them up to the high point. I am a buy-and-hold guy based on my understanding of the market, so I have no need for ETFs for that reason. I wouldn’t recommend them because I don’t recommend you buy and sell all the time.