Fidelity shared an article that discusses how younger Canadians are able to prepare themselves for the possibility of a recession.
Source: The Canadian Press
We included the key takeaways of the article below and attached the link at the bottom of the page that takes you to the full article found on Fidelity's website.
Amid soaring inflation and the Bank of Canada increasing interest rates more aggressively relative to past tightening cycles, concerns about a possible recession are growing. A lackluster stock market is adding fuel to the fire, as market declines tend to happen before a recession strikes.
CIBC economist Katherine Judge is not sounding the alarm quite yet on a recession, but says if Canada does fall into one, it could be in late 2022 or in the first half of 2023. She doesn't anticipate it being as bad as 2008, however.
"The 2008 recession was atypically deep, and if we were to experience a recession this time, odds are it wouldn’t be as severe," she says. "We expect the Bank of Canada to hike a bit less than the market is pricing in, thereby avoiding an outright recession if the (U.S.) Federal Reserve is also cautious about overdoing hikes."
Nevertheless, personal finance experts say "recession-proofing" oneself right now is imperative.
For people in their 20s and early 30s, the COVID-19 pandemic has been the biggest global event they've had to navigate as working adults, and it has forced many to look at their finances more carefully and even re-examine their career paths, putting them in a position to keep the momentum of personal growth going.
Personal finance educator Kelley Keehn believes a lot of "recession-proofing" is based around how young adults shape their career trajectory.
She says people should view themselves as a corporation.
"If you're always thinking of everyone as a customer, always looking for opportunities because you're thinking like a company, that's really going to serve you well," she says.
She also emphasizes the importance of broadening one's skillset – through certifications, courses, books, and even by following reliable social media channels and influencers – so it becomes easier to pivot in the job market if necessary. Continuing to network is just as important if not more important, she adds.
She also urges young people to assess their financial capabilities and limitations thoroughly before investing in the stock market, even during bull market runs, which we saw after the March 2020 selloff and through 2021 – a period that enticed many young people to jump in with the hope of seeing big gains.
She cites her own investing mistakes from when she was much younger, in particular, putting money into the market before she could really handle the implications and then being forced to pull it out when it was at a loss.
This article highlights how millennials and younger Canadians can help to protect themselves with the uncertainty of a recession, it also mentions near the end how many young Canadian investors took the stock markets into their own hands and tried their luck at investing, and for many it did not work out quite how they expected.
Knowing your capabilities is imperative especially in times like these- and knowing when to ask for guidance from professionals can make all the difference.
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