Financial experts say it may be wise to hold off on large purchases right now
BATON ROUGE, La. (WAFB) - There is a triple threat to your finances.
Stocks have dipped into a Bear Market. The Federal Reserve is expected to increase interest rates Wednesday. And some economists say a recession is likely.
So, what does this mean for you, your family, and your financial future?
Financial experts say the last Bear Market we had was in 2020 when the markets were down 36% because of the pandemic shutdown.
And with all the talk about inflation and the word ‘recession’ being tossed around, some people are on edge.
“And so, we have a big ole’ gumbo of bad news and bad information and bad events all pulled into one, and unfortunately consumers and investors are feeling the brunt of it,” said Mawe Takyi, a partner at Dent Wealth Advisors.
Takyi tried to break it down in simple terms what’s happening with the markets right now.
“After Covid, the governments around the world printed trillions of dollars to stimulate the economy, unfortunately, that has created inflation,” said Takyi.
He says the war in Ukraine, along with the energy crisis and supply chain issues, have certainly not helped.
“These are sort of nationwide issues. And so, while Suzy in Sorrento might be feeling that, Bob in Baton Rouge is also feeling the same thing,” said Takyi.
“We’re going to get through this, just people should relax not panic, that’s the worst thing you should do,” said Dr. Donald Andrews, Dean and Professor of Economics at the Southern University College of Business.
Bear Markets do happen regularly when the stock market goes down and there’s a lot of volatility.
Experts say it may be wise to hold off on large spending.
“So, I would basically look at big-ticket purchases and see more or less when might be a better time to enter that particular market,” said Andrews.
“I would tell most people to wait. If you think you could wait for another year or two before you buy that boat or that car, and especially if your cars running well then absolutely wait. For a house, I would say that you should also probably wait,” said Takyi.
At the end of the day, if you are a long-term investor now is not the time to abandon your plan.
And everyone will just have to wait until prices go down.
But when could that happen exactly?
“Well, I think that the biggest issue is when the war in Ukraine starts to ebb, or if we start to pump of the oil and gas here because that will help to lower our energy costs,” said Takyi.
“And want to get out of this recession, so we probably need some more production of petroleum to bring down petroleum prices. We’ve been trying to move away from fossil fuels, but now might not be the best time to do that,” said Dr. Andrews.
The recession may not happen for a year or a year-and-a-half.
Financial experts urge you to continue to invest in your 401-Ks and retirement accounts.
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