As you probably know, there is a lot of uncertainty about our economy today.  Many economists have discussed the possibility of a recession in the near future, and given the volatility in the markets, many investors see the possibility, too.

The argument for a recession is simple: Higher inflation is leading to higher interest rates.  Higher interest rates often lead to an economic slowdown, as people and businesses borrow less, and by extension, spend less.  This, in turn, can cause a spike in unemployment.

Now, we don’t have a crystal ball.  We can’t say for certain whether we will have a recession this year or not.  But, as your financial advisors, our job isn’t to predict the future, but to help you prepare for it.

Generally speaking, there are four things all investors should review and potentially adjust before a recession hits.  They are:

• Your diversification. Is your portfolio overly vulnerable to an economic downturn?
• Your risk tolerance. Are you taking on too much risk, especially in a high-interest rate environment?
• Your cash flow. How could a recession impact your income, especially in retirement?
• Your debt. How might rising interest rates affect your ability to pay off your mortgage, auto loan, or credit cards?

That’s the reason we’re writing this letter.  We want to make sure that every aspect of your finances have been accounted for when it comes to preparing you and your family for a possible recession.  By reviewing any outside assets you have, along with your goals, and your exposure to higher interest rates, we can do what needs to be done now rather than waiting until a recession actually hits.  We can plan for the future before the future becomes the present.

In the military, there’s a rule of thumb that goes, “Prior proper planning prevents poor performance.” By taking steps in advance to prepare for a possible recession, we can work to mitigate its effects on both your portfolio and your finances in general.

By doing this, we can determine:

• Whether any outside assets you have are overly risky or vulnerable to an economic downturn.
• Whether there are any steps we need to take to help you adjust to rising interest rates.
• If you have any other worries or concerns that we can help you with. We want to ensure you have a great 2023 – and to do that, we want you to feel very confident about your financial future, in both the long- and short-term.

As always, thank you for the trust you’ve placed in us.  Here’s to a great New Year!